Corporate Governance
Intermediate
Poison Pill
A shareholder-rights plan that can dilute or otherwise penalize a hostile bidder if the bidder crosses a specified ownership threshold without board approval.
Why It Matters
The poison pill gives boards powerful leverage in takeover contests and raises the core question whether boards should use that leverage to bargain, resist, or defer to shareholder choice.
Selected Literature
A short list of directly relevant archive entries.
1981
Intermediate
2002
Advanced
2002
Advanced
The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy
Lucian A. Bebchuk, John C. Coates IV, and Guhan Subramanian
Stanford Law Review
2017
Advanced
Related Cases
1985
Corporate Law
Moran v. Household International, Inc.
500 A.2d 1346 (Del. 1985)
Validity of the shareholder rights plan as an antitakeover device.
1985
Corporate Law
Unocal Corp. v. Mesa Petroleum Co.
493 A.2d 946 (Del. 1985)
Judicial review of defensive tactics adopted in response to a hostile takeover bid.
1988
Corporate Law
Blasius Industries, Inc. v. Atlas Corp.
564 A.2d 651 (Del. Ch. 1988)
Board action taken for the primary purpose of interfering with shareholder voting power.
1989
Corporate Law
Paramount Communications Inc. v. Time Inc.
571 A.2d 1140 (Del. 1989)
Board defensive action, long-term corporate strategy, and the boundary of Revlon duties.