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Poison Pill
Term category: General Business
In 10 words or less: A strategy that companies apply when they're the targets of hostile takeovers.

Definition: A poison pill is a way to make a company less attractive to a hostile buyer.  This prevents hostile takeovers and changes in management.

StockJargon Advice: Common types of poison pills include the following:

1.) The right for existing shareholders to buy shares at a discount (dilutes the acquirer)
2.) Granting more voting rights to existing shareholders.
3.) Companies may issue lots of debt or preferred stock to make themselves less attractive.

Related Articles

Poison Pills
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Wikipedia: Poison Pill
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Proof that not all people like poison pills...

Related Books

Poison Pills by University of New Haven
Wall Street Journal Guide to Understanding Money and Investments by Kenneth M. Morris
The Five Rules for Successful Stock Investing by Pat Dorsey
Beating the Street by Peter Lynch

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