Stockmarket Terms: Poison Pill
A “Poison Pill” is?
- A defensive strategy used by a company
- To make a hostile takeover difficult or unattractive
In simple terms:
- An unwanted buyer tries to take control
- The company activates a mechanism that:
Dilutes shares
Increases cost for the acquirerMaking the takeover too expensive or complex
- The company activates a mechanism that:
What’s happening?
Common mechanism:
- Existing shareholders get rights to buy more shares at a discount
- The acquirer gets diluted
Result: Ownership becomes harder to control
Stockmarket Terms
Here is a collection of stock market terms, some you may already be familiar with, and others you may not have encountered before. Discover what they mean, explore their origins, and understand how they apply to what is happening in the market today.
What you learn here has been used in our Trade for Good software.
Click on the button to find our software education videos.
You can read more of our educational articles in the Trade for Good Learn section
Trade for Good Learn
