poison pill

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Poison pill

Anti-takeover device that gives a prospective acquiree's shareholders the right to buy shares of the firm or shares of anyone who acquires the firm at a deep discount to their fair market value. Named after the cyanide pill that secret government agents are said to be instructed to swallow if capture is imminent.

Poison 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. It is important to note that a poison pill need not use both of these tactics; sometimes it utilizes only one or the other.

poison pill

An antitakeover tactic in which warrants are issued to a firm's stockholders, giving them the right to purchase shares of the firm's stock at a bargain price in the event that a suitor hostile to management acquires a stipulated percentage of the firm's stock. The poison pill is intended to make the takeover so expensive that any attempt to take control will be abandoned. See also flip-over pill, Jonestown defense, macaroni defense, suicide pill.

poison pill

see TAKEOVER BID.
Point elasticityclick for a larger image
Fig. 143 Point elasticity.

poison pill

see TAKEOVER BID.
References in periodicals archive ?
The 2004 poison pill plan was to thwart John Malone and Liberty Media Corp.
this decision, the Commission adopted the view that poison pills, while
particular, while poison pills are inevitably cease-traded at some
44) In fact, bidders essentially never trigger modern poison pills.
28) Thousands of companies have adopted poison pills since their inception in 1984.
For this study, we concentrate on three types of antitakeover devices: fair-price and non-financial effects corporate charter amendments, which are approved by shareholders, and non-shareholder approved poison pills.
The 1999 proxy season saw the success of numerous bylaw amendments aimed at removing poison pills or allowing shareholders to vote on them.
The stock market tends to react neagatively to poison pills (Malatesta and Walking, 1988; Ryngaert, 1988; Securities and Exchange Commission, 1986).
Opponents of the rights plan charged that poison pills prevented shareholders from receiving and accepting tender offers.
The IRS concluded the adoption of a poison pill plan would not be regarded as a distribution of either stock or property (a dividend) or any other event giving rise to the realization of gross income.
Resolution gives shareholders the right to approve the company's poison pill
The author contends that American regulation of poison pills achieved its apex in the Delaware Chancery's decision in City Capital Associates v.