poison pill definition

poison pill

Defensive tactics that make hostile takeover by a corporate-raider prohibitively expensive or unattractive. Poison pill takes several forms: (1) provision that makes the firm's all debts immediately payable if the board of directors is changed; (2) distribution of warrants or purchase rights for buying the firm's stock (shares) at a heavy (usually 50 percent) discount when a triggering event (takeover attempt) occurs, thus immediately diluting the raider's ownership interest and voting rights; and/or (3) issuance of a new series of preferred stock (preference shares) that gives stockholders/shareholders (not including the raider) right to redeem them at a hefty premium after a takeover. See also leveraged recapitalization and shark repellant.

poison pill is in the Decision Making, Problem Solving, & Strategy and Planning & Scheduling subjects.

poison pill appears in the definitions of the following terms: leveraged recapitalization, flip-in right and shark repellant

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