In the ﬁnancial world, the term poison pill refers to:
A) The restructuring of a ﬁrm such that the stock is delisted and no longer available to the public.
B) A type of ﬁnancial agreement that forces ﬁrms to buy back their securities at a stated price.
C) An unfriendly takeover offer that is so attractive it cannot be refused.
D) An unfriendly takeover that replaces the existing management.
E) A tactic to make unfriendly takeover attempts unappealing.

Question

Quizplus · Accepted Answer

A poison pill is a tactic used by a company to make an unfriendly takeover attempt unappealing. The company might issue new shares, making the acquisition more expensive, or create contracts that become more expensive if a takeover occurs. The goal is to make the acquisition less attractive to potential buyers.

In the ﬁNancial World, the Term Poison Pill Refers To