A poison pill is a defensive strategy used by companies to prevent hostile takeovers. It involves implementing measures that make the company less attractive to potential acquirers, such as issuing new shares or taking on debt. The goal is to make the acquisition more expensive or difficult for the acquiring company, ultimately deterring them from pursuing the takeover.
A poison pill is a defensive strategy used by a company to deter hostile takeovers. It involves implementing measures that make the target company less attractive to potential acquirers.
Typically, a poison pill allows existing shareholders to purchase additional shares at a discounted price if a hostile takeover attempt occurs. This dilutes the acquirer’s ownership stake and makes the takeover more expensive.
Yes, poison pills are generally legal, but their implementation must comply with applicable corporate laws and regulations. Companies must ensure that they do not violate any shareholder rights or engage in unfair practices.
Yes, a poison pill can be challenged in court if it is deemed to be unfair or in violation of shareholder rights. Shareholders can file lawsuits alleging breaches of fiduciary duty or other legal violations.
No, poison pills typically have a limited duration. They are usually implemented for a specific period, such as one year, and require shareholder approval for extensions.
No, poison pills are usually triggered by specific events, such as the acquisition of a certain percentage of the company’s shares or the announcement of a hostile takeover bid.
Yes, a poison pill can be waived or deactivated by the company’s board of directors if they believe it is in the best interest of the shareholders. However, this decision must be made carefully and in compliance with legal requirements.
Yes, there are certain limitations on the use of poison pills. For example, some jurisdictions may require shareholder approval for their implementation, and they must not violate any antitrust laws or regulations.
In theory, a poison pill can be used to prevent any takeover attempt, whether hostile or friendly. However, implementing a poison pill to deter a friendly takeover may face scrutiny and legal challenges.
Yes, a poison pill can be an effective defence strategy against hostile takeovers. It provides the target company with time to explore alternative options, negotiate better terms, or seek a more favorable acquisition offer.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 13th April 2024.
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