Poison Pill
A defensive measure (formally a shareholder rights plan) that allows existing shareholders other than the acquirer to purchase additional shares at a discount upon a hostile bidder crossing a threshold, diluting the acquirer.
Encyclopedia entry: Poison Pill
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poison pill
A poison pill is a corporation’s defensive strategy used against a hostile takeover . When a hostile takeover tries to merge a target company by buying its stocks publicly or privately, the target company could issue preferred stocks that will give extra dividends to its holder to defend the company.
[Last reviewed in March of 2022 by the Wex Definitions Team
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Encyclopedia content from Cornell LII Wex (CC-BY-NC-SA 2.5).
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