Flip-In Poison Pill

AAA

DEFINITION of 'Flip-In Poison Pill'

A type of poison pill strategy in which existing shareholders, but not acquiring shareholders, are allowed to purchase shares in the target company at a discount. A flip-in poison pill takeover defense dilutes the value of the shares purchased by the acquiring company by flooding the market with new shares, while also allowing investors who purchase the new shares to profit instantaneously from the difference between the discounted purchase price and the market price.

INVESTOPEDIA EXPLAINS 'Flip-In Poison Pill'

Poison pill provisions are often found in a company's bylaws or charter as a public display of their potential use as a takeover defense. This tells any company thinking about a hostile takeover that they will face a lot of difficulties. Companies looking to fight this strategy may try to have a court dissolve any program providing the deep discount, but the chances of success are uncertain.

RELATED TERMS
  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Flip-Over Pill

    A type of poison pill strategy in which shareholders have the ...
  3. Acquisition Premium

    The difference between the estimated real value of a company ...
  4. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  5. Black Knight

    A company that makes a hostile takeover offer for a target company. ...
  6. Macaroni Defense

    An approach taken by a company that does not want to be taken ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. The Merger - What To Do When Companies ...
    Investing Basics

    The Merger - What To Do When Companies ...

  3. Key Players In Mergers And Acquisitions
    Fundamental Analysis

    Key Players In Mergers And Acquisitions

  4. Corporate Takeover Defense: A Shareholder's ...
    Mutual Funds & ETFs

    Corporate Takeover Defense: A Shareholder's ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center