Poison pill is one of the representative takeover defense measures in the United States, also called rights plan. It is a defensive measure in the field of M & A such as company acquisition, merger, sale. It is a way to prevent hostile takeovers by issuing stock acquisition rights in advance to existing shareholders. How is this method carried out? Suppose a hostile buyer places a hostile TOB against a company. And the shareholding ratio of hostile takeovers has reached a certain percentage (for example 15% to 20%). Then the new stock will be issued to the shareholders other than the hostile takeovers according to the preset provision. Because issuing new shares in such a situation is set at a price cheaper than the market price, existing shareholders will steadily acquire new shares. As a result, the shareholding ratio of hostile takeovers will decline, making it difficult to continue hostile TOBs. In this way, Poison Pill puts on options that existing purchasers can not exercise in advance, and in the event of hostile takeovers as described above, shareholders other than the acquirer will implement that option. The objective is to make it impossible for the acquirer itself to lower itself by lowering the shareholding ratio of the acquirer or increasing the cost for acquisitions necessary for the acquirer to gain control.
Continue buying until you activate the poison pill and put pressure on it
It is called “poison (poison) pill” because it is activated when the acquirer’s shareholding ratio exceeds a certain level and has an effect of promoting poisoning to the acquirer. Poison pill is an extremely powerful takeover defense measure because hostile bidder can automatically activate and generate a dramatic effect when buying more than a certain number of shares at TOB, so many It is adopted by companies. In Japan, because there is regulation of company law, we can not adopt exactly the same mechanism as poison pill of the United States, but it is considering to cause the same effect by countermeasure using utilizing stock acquisition right. The hostile takeovers will also be required to respond to poison pills. Therefore, when hostile acquirers also proceed with the acquisition of companies introducing poison pill, we will not normally buy stocks until poison pill is triggered. Rather, we will proceed with buying up until just before the poison pill activates, giving pressure, sending officials to the management team, or asking for reform of management team.