What is a poison pill in takeovers?

A poison pill, also known as a shareholder rights plan, is a contingency written into a company's bylaws that gives the company's board of directors the right to dilute a shareholder's stake in the company in the event of a hostile takeover.

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Stockholders' Rights Plan of Datascope Corp.

King Washington Stockholders' Rights Plan of Datascope Corp.

Name: King Washington Stockholders' Rights Plan of Datascope Corp.
Brand: US Legal Forms
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Corporations - Public - ReIncorporation

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King

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US-CC-8-162B

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This sample form, a detailed Stockholders' Rights Plan document, is a model for use in corporate matters. The language is easily adapted to fit your specific circumstances. Available in several standard formats.

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How to fill out King Washington Stockholders' Rights Plan Of Datascope Corp.?

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A system of shareholder rights is an integral part of any corporate governance system. These rights ensure that shareholders are able to voice their opinions on board nominees and other proxy initiatives, as well as other corporate actions that may affect the value of their interests.

The poison pill term originated from spies who carried toxic pills that could be ingested to avoid capture. Spies would swallow these pills if they thought they were about to be caught, similarly to how a target company may employ poison pill tactics to avoid hostile takeovers.

A poison pill, also known as a shareholder rights plan, is a contingency written into a company's bylaws that gives the company's board of directors the right to dilute a shareholder's stake in the company in the event of a hostile takeover.

The general idea of a poison pill is to dissuade any outside takeover attempt by either making the company less desirable or by typically diluting an acquirer's ownership of the target. A common type of poison pill strategy is known as the ?flip-in.?

The goal of a shareholder rights plan is to force a bidder to negotiate with the target's board and not directly with the shareholders. The effects are twofold: It gives management time to find competing offers that maximize the selling price.

Common shareholders are granted six rights: voting power, ownership, the right to transfer ownership, dividends, the right to inspect corporate documents, and the right to sue for wrongful acts.

A poison pill is a type of takeover defense that companies can use to discourage hostile takeovers. A poison pill gives shareholders the right to buy more shares at a discount if an unsolicited bid is made for the company. This makes it harder for the bidder to acquire a majority stake in the company.

Drawbacks of Poison Pills By discouraging a motivated buyer from buying more company stock, a poison pill is likely to leave a share price lower than it would be otherwise, at least in the short run. Poison pills can also shield underperforming company managers from shareholder efforts to replace them.

A poison put is a takeover defense strategy in which the target company issues a bond that investors can redeem before its maturity date. A poison put is a type of poison pill provision designed to increase the cost a company will incur to acquire a target company.

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King Washington Stockholders' Rights Plan of Datascope Corp.

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