poison pill

Popular Terms
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.

Use 'poison pill' in a Sentence

Sometimes you just need to take the poison pill and get it over with before you suffer any longer in your plan.
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I did not trust the doctor because he might give me a poison pill that would kill me, or injure me very badly.
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The poison pill was administered by the opposing firm in the market which made out next play complex and difficult to create.
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