Flip-In Poison Pill


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.

BREAKING DOWN '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.

  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. Black Knight

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

    An approach taken by a company that does not want to be taken ...
  5. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  6. Acquisition Premium

    The difference between the estimated real value of a company ...
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