poison pill

The phrase "poison pill" refers to a defensive strategy used by a company to prevent or deter unwanted takeovers or acquisitions. It is typically implemented through the adoption of provisions in a company's bylaws or charter that make the target company less attractive or financially burdensome to the acquiring company. A poison pill typically involves creating certain conditions that make the acquisition or takeover process unfavorable for the acquiring company. These conditions may include issuing new shares to existing shareholders at a discounted price, adding significant debt to the target company's balance sheet, or granting favorable rights or privileges to existing shareholders. Ultimately, the poison pill aims to increase the cost or complexity of an acquisition, discouraging potential acquirers and protecting the target company's independence.