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.