Poison Pill

A Poison Pill is a defensive strategy used by companies to prevent hostile takeovers. When a company is threatened by an unwanted acquisition, it can implement measures that make itself less attractive to the buyer. For instance, it might allow existing shareholders to purchase additional shares at a discount, diluting the value of shares held by the potential acquirer. This strategy aims to increase the cost and difficulty of the takeover, thereby protecting the company's independence and making it less appealing to the aggressor.