poison pill. A corporation’s defense against an unwanted takeover bid whereby shareholders are granted the right to acquire equity or debt securities at a favorable price to increase the bidder’s acquisition costs. — Often shortened to pill. See TAKEOVER DEFENSE. Cf. PORCUPINE PROVISION. [Cases: Corporations 310(1). C.J.S. Corporations §§ 475, 477–484, 487–489.] “Another recent tactic […]
bid, n. 1. A buyer’s offer to pay a specified price for something that may or may not be for sale (a bid at an auction) (a takeover bid). best bid. The highest auction bid; in the letting of a contract, the lowest bid by a qualified bidder. [Cases: Auctions and Auctioneers 7. C.J.S. Auctions
golden parachute. An employment-contract provision that grants an upper-level executive lucrative severance benefits — including long-term salary guarantees or bonuses — if control of the company changes hands (as by a merger). Cf. TIN PARACHUTE. [Cases: Corporations 308(3). C.J.S. Corporations §§ 532–533, 536.] “Key executives may be provided with significant employment contract clauses that are
porcupine provision. A clause in a corporation’s charter or bylaws designed to prevent a takeover without the consent of the board of directors. Cf. SHARK REPELLENT ; POISON PILL.
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Slang. A (usu. hostile) takeover strategy in which the acquiring entity offers the target firm a price per share that is significantly higher than market value, intending to squeeze the target into accepting.
Pac-Man defense (pak-man). An aggressive antitakeover defense by which the target company attempts to take over the bidder company by making a cash tender offer for the bidder company’s shares. • The name derives from a video game popular in the 1980s, the object of which was to gobble up the enemy. This defense is
show-stopper. Corporations. An antitakeover tactic by which the target company seeks an injunction barring the takeover offer, usu. because the proposed merger violates antitrust laws.
A public offer to buy a minimum number of shares directly from a corporation’s shareholders at a fixed price, usu. at a substantial premium over the market price, in an effort to take control of the corporation. — Also termed takeover offer; takeover bid. Cf. public-exchange offer under OFFER. [Cases: Securities Regulation 52.30–52.50. C.J.S. Securities
tin parachute. An employment-contract provision that grants a corporate employee (esp. one below the executive level) severance benefits in the event of a takeover. • These benefits are typically less lucrative than those provided under a golden parachute. — Also termed silver parachute. Cf. GOLDEN PARACHUTE.
crown jewel. A company’s most valuable asset, esp. as valued when the company is the subject of a hostile takeover. • A common antitakeover device is for the target company to sell its crown jewel to a third party so that the company will be less attractive to an unfriendly suitor.