What is a poison pill strategy?

A poison pill strategy is a financial strategy that helps protect companies from hostile takeovers. It was first developed and used in Delaware in the early 1980s. A poison pill strategy works by allowing the company’s shareholders to acquire additional shares at a discounted price in the event of a hostile takeover. This makes the company less desirable to the acquirer because acquiring the new shares would make the takeover cost prohibitively expensive. The poison pill strategy is an important part of corporate law in Delaware. It is an important part of corporate defense because it makes it more difficult for a hostile party to gain control over a company. In addition to the poison pill strategy, Delaware corporate law also provides other defenses such as anti-takeover laws, supermajority voting rights, and staggered boards. These strategies can work together to limit the amount of control a hostile party can gain over a company. The poison pill strategy is also known as a shareholders’ rights plan. Delaware corporate law recognizes the importance of protecting companies from hostile takeovers and provides corporations with the means to do so.

Related FAQs

What are the types of corporate entities?
What are the benefits of forming a corporation?
What is the process for corporate proxy voting?
What are the legal liabilities of corporate directors?
What is the process for issuing corporate stock certificates?
What is the process for corporate dividend reinvestment?
What are the environmental laws and how do they affect corporations?
What is the process for issuing corporate warrants?
What is the process for issuing corporate notes?
What is a corporate code of ethics?

What is a poison pill strategy?

Related FAQs

Related Blog Posts