Week 3 Bonds 3 - Our text gives an example from 1988 of a...

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Poison Pill Strategy is many times referred to as a plan to protect shareholder’s rights. It is a defense method that helps companies when they are faced with hostile takeover bids. Many companies are not equipped or prepared to handle such bids. Poison Pill methods forces acquiring companies to negotiate with the board of directors instead of cornering the shareholders. One example is the Poison Debt approach where the company to be acquired issues bonds with specific and the intent to avoid a hostile takeover.
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Unformatted text preview: Our text gives an example from 1988 of a buyout of RJR Nabisco. It describes a super poison put as enabling bondholders to put a bond back to the issuer at par when event risk occurs as there is a merger or a takeover. This implies the same thing that the articles summed up as protecting the shareholder’s rights. Source: http://www.referenceforbusiness.com/management/Or-Pr/Poison-Pill-Strategies.html...
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