Investing for Beginners , investing

A poison pill is one of the strategies used to avoid hostile takeover. Poison pills are some rules in company’s charters that give some extra rights for corporation. Poison pills may be rights to acquire more shares at a discount price or provide a “gold” share with special voting rights to maintain control over management. The legitimacy of poison pill depends on country’s law system and usually is protested by the company which tries to execute the acquisition. Investment markets react differently to poison pill and price of the acquirer stocks is at the risk.