noun
General Slang
Poison pill
· noun · finance
Defensive trick that floods the market with cheap shares to choke a hostile takeover.
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Definitions
1
A defence cooked up by the target's board. The second a raider crosses a set ownership threshold, every other shareholder gets to buy new stock at a deep discount. The raider's stake gets diluted into nothing and the deal becomes too expensive to swallow.
“The board swallowed a poison pill the morning after Musk filed his 13D — nobody was getting this company on the cheap.”
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2
By extension, any clause buried in a contract or bill designed to make the whole thing toxic to the other side.
“Republicans tucked a poison pill into the spending bill knowing the Senate would never wear it.”
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Poison pill In A Sentence
The board swallowed a poison pill the morning after Musk filed his 13D — nobody was getting this company on the cheap.
Republicans tucked a poison pill into the spending bill knowing the Senate would never wear it.
Origin & Usage
Coined by M&A lawyer Martin Lipton of Wachtell, Lipton, Rosen & Katz in 1982 as the 'shareholder rights plan'.
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