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Thursday, 05/10/2018 3:37:55 PM

Thursday, May 10, 2018 3:37:55 PM

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So boston, Peeteman, OMID what do you think of this explanation of a poison pill? I posted this earlier and was hoping for some input. The following is from an article from Wall Street Mojo

https://www.wallstreetmojo.com/poison-pills/

A “Poison Pill” is a popular defense mechanism for a “target company” wherein it uses shareholder’s right issue as a tactic to make the hostile acquisition deal expensive or less attractive for the raiders. This strategy also acts as a tool to slow down the speed of potential hostile attempts in future.

Poison pills are generally adopted by the Board of directors without the approval of shareholders. It also comes with a provision that the rights associated can be altered or redeemed by the board when required. This to indirectly compel direct negotiations between the acquirer and the Board, so as to build grounds for better bargaining power.
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