The definition of a ‘flip-over poison Pill’
Flip-over poison pill is a type of strategy defensive poison pill that allows shareholders to buy shares in the acquiring company at a deeply discounted price if a hostile takeover succeeds.
Breaking down the ‘flip-over poison Pill’
Flip-over poison pills are one of the most frequently used poison pill a strategy used to combat unwanted attempts to capture because they are an effective deterrent. If the acquisition is successful, the shareholders of the target company is to dilute the equity of the shareholders of the acquirer.
This usually makes any deal so unattractive that the buyer is forced to negotiate the terms with the Board of Directors, but poison pill rights plan, which takes effect as soon as the takeover proposal is made and should be included in the articles of Association.
Alternative to flip-over poison pill flip-in “poison pill,” which gives existing shareholders of the target company, except acquirer, rights to purchase additional shares of the target company at a reduced price. Other means of protection against hostile takeovers include greenmail, PAC-man defense white knight and white squire defense, creating staggered boards and supermajority rules.