What is a dead hand pill?
A dead hand provision, also known as a dead hand poison pill, is a strategy utilized by a target company to ward off the advances of a hostile takeover.
How does flip over poison pill work?
What is Flip-Over Poison Pill? Flip-Over Poison Pill is a defensive strategy that enables shareholders to purchase shares in an acquiring company at a highly discounted price. It gets triggered when a hostile bid is successful, and strategy is commonly used to combat unwanted takeover attempts.
What is a poison pill trigger?
A poison pill is a defense tactic utilized by a target company to prevent or discourage hostile takeover attempts. Poison pills allow existing shareholders the right to purchase additional shares at a discount, effectively diluting the ownership interest of a new, hostile party.
Are Poison pills illegal?
Some courts have found poison pills to be per se illegal. Generally, when courts find that management has refused to eliminate the pill simply for the purpose of driving up the price paid to shareholders (as a negotiating tactic), courts support the use of pills.
What do you mean by staggered board?
A staggered board is a board that consists of directors grouped into classes who serve terms of different lengths. A typical staggered board has three to five classes of positions on the board, each carrying terms of service that vary in length, allowing for a staggering of elections.
What is poison put?
A poison put is a takeover defense strategy in which the target company issues a bond that investors can redeem before its maturity date. A poison put is a type of poison pill provision designed to increase the cost a company will incur in order to acquire a target company.
What is green mailing?
What Is Greenmail? Greenmail is the practice of buying enough shares in a company to threaten a hostile takeover so that the target company will instead repurchase its shares at a premium. Regarding mergers and acquisitions, the company makes a greenmail payment as a defensive measure to stop the takeover bid.
What is hostile takeover bid?
A hostile takeover bid is an attempt to buy a controlling interest in a publicly-traded company without the consent or cooperation of the target company’s board of directors. A proxy fight is a campaign to get shareholder support for the replacement of board members with advocates of the takeover.
What is a poison pill price?
Flip-in Poison Pill Option Shareholders have “rights” attached to the stock they already own. This allows them to pay an exercise price to use their rights. When they pay that exercise price, they’re entitled to a value of common stock or participating preferred stock at market value on the transaction date.
Why are staggered boards bad?
A staggered board is also known as a classified board because of the different classes involved. This means that only a third of the board composition can turn over in any given year, thus presenting a formidable obstacle for any would-be hostile bidders that might seek to gain control of the board.
Is Green Mail illegal?
Greenmail is a corporate business tactic used by those that are financially savvy. Many countertactics have been applied to defend against and to financially engineer the reception of a greenmail. There is a legal requirement in some jurisdictions for companies to impose limits for launching formal bids.
What is a dead hand poison pill?
Updated Apr 26, 2018. A dead hand provision, also known as a dead hand poison pill, is a special type of poison pill anti-takeover defense, in which the stock holdings of the bidder are massively diluted by shares being issued to every shareholder except them.
What is the meaning of dead hand provision?
DEFINITION of ‘Dead Hand Provision’. A dead hand provision, also known as a dead hand poison pill, is a special type of poison pill anti-takeover defense, in which the stock holdings of the bidder are massively diluted by shares being issued to every shareholder except them. Next Up. Poison Pill.
How do you stop a dead hand takeover?
Dead hand provisions may only be rescinded by the directors who adopted them and, therefore, cannot be stopped by ousting management via a proxy battle. Acquisitions happen all the time, although not all of them are welcomed by company management.
Are dead hand proxy puts now under attack?
Nonetheless, dead hand proxy puts are now under attack. While proxy puts without a dead hand feature are generally not being challenged, based on recent case law, these provisions in most cases will not permit a bank to accelerate the debt on a change of control of the borrower’s board (as explained below).