“Another recent tactic is the ‘poison pill’ which is a conditional stock right that is triggered by a hostile takeover and makes the takeover prohibitively expensive. The poison pill is a variation of the scorched earth defense ….” Thomas Lee Hazen, The Law of Securities Regulation § 11.20, at 575 (2d ed. 1990).
poison pill
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.]
