What is a Poison Pill?

What is a poison pill and how does it work in business takeovers?

Ever heard of a 'poison pill' in the corporate world and wondered what it is? Yale Law School's Professor John Morley unravels this intriguing defense strategy against hostile takeovers. 🛡️💼

A poison pill is like a corporate superpower, swooping in to protect a company when someone tries to buy a big chunk of its stock without board approval. It empowers other stockholders to buy loads of company stock at a discounted price, reducing the acquirer's share and the value of their stock.

Take the case of Elon Musk's attempted Twitter takeover. Twitter's board retaliated with a poison pill which, if triggered, would have diluting Musk's ownership and the value of his shares. This halted the acquisition until the board and Musk reached an agreement.

But is it all just a power play? The cynics might say it's a way for the board and senior management to keep their jobs. But there's another side to the story. A poison pill can give a company breathing space to negotiate a fair deal, and protect the interests of employees and other stakeholders.

The poison pill is a powerful legal tool that can act as a corporate shield. Join Professor Morley as he delves deeper into this complex and captivating aspect of the business world.

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