Poison pills represent a new class of securities issued by a company to its shareholders, which have no
value unless an investor acquires a specific percentage of the firm's voting stock.

Question

Quizplus · Accepted Answer

Poison pills are defensive strategies used by companies to deter hostile takeovers. They involve issuing new securities to existing shareholders, which become valuable only if an outside party acquires a certain percentage of the company's stock, diluting the potential acquirer's stake.

Poison Pills Represent a New Class of Securities Issued by a Company