Poison Pill

The term “poison pill”, as used in finance, refers to a series of mechanisms employed by companies to ward off hostile takeovers. In every case, a poison pill greatly increases the cost of a hostile takeover.

A “people pill” is a form of poison pill under which key company staff are obliged to resign in the event of a takeover. The issuance of special bonds (known as “poison puts”) which include a clause that specifically allows bondholders to collect repayment ahead of maturity in the event of a hostile takeover, are another type of poison pill.

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