Shareholder Rights Plan
Content
Definition
A Shareholder Rights Plan, also known as a "poison pill," is a defense strategy against hostile takeovers. It allows existing shareholders to purchase additional shares at a discount if an acquirer surpasses a certain ownership threshold, diluting the acquirer`s stake.
Usage and Context
A shareholder rights plan prevents hostile takeovers by letting shareholders buy additional shares at a discount.
Frequently asked questions
- What is the poison pill in shareholder rights plan? A poison pill is a tactic to make a company less attractive to potential acquirers, usually to fend off hostile takeovers.
- What is an example of a poison pill a form of takeover defense? A poison pill might allow existing shareholders to purchase additional shares at a discount, making it more costly for a potential acquirer to gain control.
- What is the meaning of poison pill? A poison pill is a tactic used by companies to make themselves less attractive to hostile takeover attempts.
Benefits
A shareholder rights plan allows shareholders to buy additional shares at a discount to deter hostile takeovers.
Conclusion
A shareholder rights plan stops hostile takeovers by allowing shareholders to buy additional shares at a discount.
