suicide pill

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Suicide pill

A hostile takeover prevention tactic that could destroy the target company. Taking on a large amount of debt to prevent the takeover might cause bankruptcy, for example.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Suicide Pill

An antitakeover measure stipulating that shareholders on the receiving end of a hostile takeover may buy shares in their own company at a price below fair market value. Once the acquisition is complete, the provision allows these same shareholders to buy more shares in the new company for below market value. This forces shareholders in the acquiring company to suffer a devaluation and dilution of their own shares. This is done to discourage hostile takeovers among the shareholders of the acquiring companies. In essence, a suicide pill is identical to a poison pill except for degree; the term suicide pill indicates that the target company may intentionally go bankrupt, rather than simply weaken itself.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

suicide pill

A poison pill provision so devastating to the target of a takeover attempt that the target company may have to be liquidated to satisfy its creditors. For example, the company's directors may institute a suicide pill giving stockholders the right to exchange their stock for debt if a raider acquires more than a specified percentage of the company's outstanding shares. The tremendous increase in debt will effectively doom the target company if the takeover attempt is successful.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
foreign policy, then we do live in a sort of Jonestown, and huge stockpile of suicide pills is needed after all.
In neighboring Oregon, where assisted suicide is already legal, the state has refused to cover the cost of life-sustaining treatments for some patients facing terminal illness, while callously informing them that Oregon will pay for suicide pills. Such policies betray the ideal of America as a compassionate society honoring the inherent worth of every human being.
They all carried suicide pills - known as "cough drops" - and after every sabotage operation they would leave behind a British Army beret so that the Germans wouldn't carry out reprisals on local villages.