poison pill

poison pill
poi·son pill n: a financial tactic or provision used by a company to make an unwanted takeover prohibitively expensive or less desirable

Merriam-Webster’s Dictionary of Law. . 1996.

poison pill
A defensive strategy for avoiding a hostile takeover in which a company offers low-price stock to its current shareholders in order to dilute the shares and make it more expensive for another company to buy them out.
Category: Business, LLCs & Corporations → LLCs, Corporations, Partnerships, etc.

Nolo’s Plain-English Law Dictionary. . 2009.

poison pill
poison pill, Also known as a shareholder rights plan.
In the context of takeovers, action taken by the target to make itself unattractive to a bidder or potential bidder. Such action is restricted under the UK City Code on Takeovers and Mergers (Rule 21) and is more common in the US.
+ poison pill, aka shareholder rights plan
USA
poison pill, Also known as a shareholder rights plan.
A poison pill is a defensive measure used by public companies to frustrate hostile takeover attempts by third parties. A corporation adopts a poison pill by executing a shareholder rights agreement (also known as a rights plan). Under the rights agreement, shareholders receive "rights" (similar to warrants) to purchase the corporation's stock at a substantial discount when the plan is triggered. Usually these rights are distributed (or triggered) when a third party purchases a certain amount of the target company's stock (commonly 15% or 20%). Once the poison pill is triggered, the acquisition can become very expensive for the prospective acquiror and any target company stock previously purchased becomes significantly diluted. The most common types of rights plans are "flip-in" and "flip-over" plans. Flip-in plans give the target company's shareholders the right to purchase additional target company stock (typically on a one-for-one basis) at the discounted price. Flip-over plans give the target company's shareholders the right to purchase stock of the acquiring company at a discounted price.
For more information see Practice Note, Poison Pills: Defending Against Takeovers and Protecting NOLs (www.practicallaw.com/3-386-0340).

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.


poison pill
A defensive strategy based on issuing special stock that is used to deter aggressors in corporate takeover attempts.

Dictionary from West's Encyclopedia of American Law. 2005.


poison pill
A defensive strategy based on issuing special stock that is used to deter aggressors in corporate takeover attempts.

Short Dictionary of (mostly American) Legal Terms and Abbreviations.

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Look at other dictionaries:

  • Poison pill — is a term referring to any strategy, generally in business or politics, to increase the likelihood of negative results over positive ones for a party that attempts any kind of takeover. It derives from its original meaning of a literal poison… …   Wikipedia

  • poison pill — poison pills N COUNT A poison pill refers to what some companies do to reduce their value in order to prevent themselves being taken over by another company. [BUSINESS] Some believe this level of compensation is essentially a poison pill to put… …   English dictionary

  • poison pill — A poison pill is a strategy designed to prevent a company from being taken over …   The small dictionary of idiomes

  • poison pill — n technical informal something in a company s financial or legal structure that is intended to make it difficult for another company to take control of it …   Dictionary of contemporary English

  • poison pill — ☆ poison pill n. Business any defensive measure for preventing the takeover of a corporation by making its acquisition prohibitively expensive for the party attempting to acquire it …   English World dictionary

  • Poison pill — Anit 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 agents are …   Financial and business terms

  • 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 …   Financial and business terms

  • poison pill — noun the target company defends itself by making its stock less attractive to an acquirer • Hypernyms: ↑shark repellent, ↑porcupine provision • Hyponyms: ↑suicide pill * * * noun, pl ⋯ pills [count] business : something that a company does to… …   Useful english dictionary

  • poison pill — UK / US noun [countable] Word forms poison pill : singular poison pill plural poison pills business an action taken by a company in order to make someone less likely to want to start a takeover bid for it …   English dictionary

  • poison pill — n. an element introduced into the restructuring of a corporation so that it becomes undesirable for another corporation to take over. □ Acme Corporation approved a poison pill to prevent a hostile takeover. □ Mr. Boone would have bought the… …   Dictionary of American slang and colloquial expressions

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