Rights Agreement (aka "Poison Pill")
An anti-takeover arrangement often established by a company in anticipation of a hostile takeover attempt. The company appoints a Rights Agent who will issue Rights Certificates to each shareholder at the time of the takeover attempt. The shareholder may then exercise these rights to receive additional shares of stock and/or debentures, making the target company more expensive to acquire as a result of the additional shares outstanding, or the additional debt.
Nearby TermsRight of redemption Right of rescission Rights Agreement (aka "Poison Pill") Rights of set-off Rights Offering
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University