When a company faces the prospect of a hostile takeover, its board may reach for traditional anti-takeover defences. “Poison pills,” for instance, allow existing shareholders to buy additional shares at a discount, diluting a would-be acquirer’s stake and making the target more expensive to absorb.
Hostile takeovers occur when one company attempts to acquire another against the wishes of the target’s board of directors, typically by purchasing a majority of its shares on the open market. They are, by design, adversarial, and the defences against them have historically been financial and legal.
