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suicide pill

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Financial Dictionary

Suicide Pill

A defensive strategy by which a target company engages in an activity that might actually ruin the company rather than prevent the hostile takeover. Also known as the "Jonestown Defense."

Investopedia Commentary

This is an extreme version of the poison pill.

Related Links

The Wacky World of M&As
The Basics of Mergers and Acquisitions

See also: Busted Takeover, Enterprise Value, Hostile Takeover, Jonestown Defense, Management Buyout (MBO), Merger, Poison Pill, Sandbag, Saturday Night Special, Scorched Earth Policy, Shark Repellent, Sleeping Beauty, Voting Shares, Whitemail

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Financial Dictionary

suicide pill

A poison pill provision so devastating to the target of a takeover attempt that the target company may have to be liquidated to satisfy its creditors. For example, the company's directors may institute a suicide pill giving stockholders the right to exchange their stock for debt if a raider acquires more than a specified percentage of the company's outstanding shares. The tremendous increase in debt will effectively doom the target company if the takeover attempt is successful.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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