poison pill strategy

A poison pill strategy is a defensive maneuver used by a company to deter hostile takeovers. When a potential buyer tries to acquire the company, the poison pill triggers measures that make the takeover unattractive or expensive. This can include allowing existing shareholders to purchase additional shares at a discounted rate, which dilutes the value of shares for the buyer. This strategy aims to protect the company's independence and ensure that any acquisition is done with the consent of the board, often leading to negotiations that are more favorable for the existing company owners.