Twitter's board of directors on Friday and will allow shareholders to purchase discounted stock in the event that a business or individual acquires more than 15% of the company without the board's approval. 1
The strategy's "poison pill" moniker comes from the fact that the purpose is to make share acquisitions over the shareholder rights plan's limit unpleasant. 2
merged with another company, or sold or transferred more than 50% of the company's assets. 3
As hostile takeovers began shaking up corporate boardrooms in 1982, shareholder rights plans proved useful as a delaying strategy
– A shareholder rights plan is likely to lower a company's share price in the short term by deterring a motivated buyer from purchasing more stock.
– poison pills can also prevent shareholders from removing entrenched and failing firm managers.