POISON PILL

Corporations use this strategy to discourage aggressive takeovers. With a poison pill, the target company tries to make its stock less attractive to the acquirer. There are two types of poison pills:

  1. A "flip-in" lets existing shareholders (except the acquirer) to buy more shares at a discount.
  2. A "flip-over" lets stockholders to buy the shares of the acquirer at a discounted price after the merger