Poison Pill

Definition:

A defensive strategy used by US companies to discourage Hostile Takeovers. With a Poison Pill, the Target attempts to make its stock less attractive to the acquirer. The two most common types of Poison Pills include a “flip-in,” which allows existing shareholders (except the acquirer) to buy more shares at a discount, and a “flip-over,” which allows stockholders to buy the acquirer’s shares at a discount after the merger.

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