Poison Pill (Noun)
Meaning
The target company defends itself by making its stock less attractive to an acquirer.
Classification
Nouns denoting acts or actions.
Examples
- The company's board of directors implemented a poison pill provision to prevent a hostile takeover by diluting the acquirer's stake.
- In response to the unsolicited bid, the target company adopted a shareholder rights plan, which effectively served as a poison pill to the would-be acquirer.
- As a defensive measure, the company put in place a poison pill that would trigger a steep discount on the sale of its shares to any single entity.
- The poison pill provision, also known as a "dead hand" clause, allowed the company to call for additional shares to be issued to existing shareholders, thereby reducing the value of the acquirer's stake.
- The target company's stock price dropped sharply as investors anticipated the implementation of a poison pill defense mechanism to thwart the hostile takeover bid.