Suicide Pill

AAA

DEFINITION of 'Suicide Pill'

A defensive strategy by which a target company engages in an activity that might actually ruin the company rather than prevent the hostile takeover. Suicide pills are extreme actions that differ from situation to situation, some of which result in disolving the company; however, the underlying intent is to avoid the hostile takeover of the firm by any means necessary.


Also known as the "Jonestown Defense."

INVESTOPEDIA EXPLAINS 'Suicide Pill'

The suicide pill defense can be viewed as an extreme version of the poison pill. Such a defense is most often implemented in situations where a competitor attempts a hostile takeover of a firm, and the target's management or current ownership, viewing the takeover as a forgone conclusion, would prefer the company cease to exist than see the firm taken over by the competitor. Taking on excessive amounts of debt would be one form of a suicide pill.

RELATED TERMS
  1. Management Buyout - MBO

    A transaction where a company’s management team purchases the ...
  2. Saturday Night Special

    An obsolete takeover strategy where one company attempted a takeover ...
  3. Scorched Earth Policy

    A takeover prevention strategy in which the target company seeks ...
  4. Busted Takeover

    A highly leveraged corporate buyout that is contingent upon the ...
  5. Sleeping Beauty

    A company that is considered prime for takeover, but has not ...
  6. Shark Repellent

    Slang term for any one of a number of measures taken by a company ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. What happens to the stock prices of ...
    Investing

    What happens to the stock prices of ...

  3. The Basics Of Mergers And Acquisitions
    Options & Futures

    The Basics Of Mergers And Acquisitions

  4. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

comments powered by Disqus
Hot Definitions
  1. 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 ...
  2. Ratio Analysis

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

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

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. 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" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center