Financial poison pill

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Financial poison pill (or, simply, poison pill or poison pills) is shareholder rights provision that allows existing shareholders in a company to purchase additional shares of stock at a lower-than-market value if a potential acquirer purchases a controlling stake in the company.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Poison pills. Shareholder rights provisions that allow existing shareholders in a company to purchase additional shares of stock at a lower-than-market value if a potential acquirer purchases a controlling stake in the company.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Poison pill. An action that will seriously hurt a company if it is acquired by another.

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