Business Glossary

strategic move by a takeover-target company to make its stock less attractive to an acquirer. For instance, a firm may issue a new series of preferred stock that gives shareholders the right to redeem it at a premium price after a takeover. Two variations: a flip-in poison pill allows all existing holders of target company shares except the acquirer to buy additional shares at a bargain price; a flip-over poison pill allows holders of common stock to buy (or holders of preferred stock to convert into) the acquirer's shares at a bargain price in the event of an unwelcome merger. Such measures raise the cost of an acquisition, and cause dilution, hopefully deterring a takeover bid. A third type of poison pill, known as a people pill, is the threat that in the event of a successful takeover, the entire management team will resign at once, leaving the company without experienced leadership.

measure undertaken by a corporation to discourage unwanted takeover attempts. Also called porcupine provision. For example:

1. fair price provision requiring a bidder to pay the same price to all shareholders. This raises the stakes and discourages tender offers designed to attract only those shareholders most eager to replace management.
2. golden parachute contract with top executives that makes it prohibitively expensive to get rid of existing management.
3. defensive merger, in which a target company combines with another organization that would create antitrust or other regulatory problems if the original, unwanted takeover proposal was consummated. See also safe harbor.
4. staggered board of directors, a way to make it more difficult for a corporate raider to install a majority of directors sympathetic to his or her views.
5. supermajority provision, which might increase from a simple majority to two-thirds or three-fourths the shareholder vote required to ratify a takeover by an outsider.

tactics taken by management to ward off a hostiletakeover that are so extreme that they appear suicidal for the company. For example, the company may try to sell its crown jewels or take on a huge amount of debt to make the company undesirable to the potential acquirer. The term refers to the mass suicide led by Jim Jones in Jonestown, Guyana, in the early 1980s.