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  • October 2007 (Revised December 2008)
  • Background Note

Evaluating M&A Deals: How Poison Pills Work

By: Carliss Y. Baldwin
The poison pill defense against hostile takeovers was invented in 1982 by Martin Lipton, of Wachtell, Lipton, Rosen and Katz. Pills are considered the most effective of all the normal defenses against a hostile bidder. Describes the two basic types of poison pills... View Details
Keywords: Negotiation Deal; Mergers and Acquisitions
Related
  • Forthcoming
  • Article

Redemption Mechanisms in Poison Pills: Evidence on Pill Design and Law Firm Effects

By: Olivier Baum and Guhan Subramanian
We present the first evidence on the incidence of “trip wire” versus “last look” poison pills. Using a hand-collected data set of 130 poison pills implemented and/or amended between January 1, 2020 and March 31, 2023, we find that pills are almost evenly divided... View Details
Keywords: Acquisition; Negotiation Tactics; Contracts
Related
  • winter 2007
  • Article

Bargaining in the Shadow of PeopleSoft's (Defective) Poison Pill

By: Guhan Subramanian
Keywords: Negotiation; Software; Information Technology Industry
Related
  • June 1998
  • Article

A New Takeover Defense Mechanism: Using an Equal Treatment Agreement as an Alternative to the Poison Pill

By: Guhan Subramanian
Keywords: Strategy; Agreements and Arrangements; Horizontal Integration
Related
  • 2022
  • Article

Pills in a World of Activism and ESG

By: Guhan Subramanian and Caley Petrucci
Easterbrook and Fischel’s The Economic Structure of Corporate Law advances their now famous passivity thesis, which posits that managers should remain passive in the face of an unsolicited tender offer for the company’s shares. Consistent with the broader... View Details
Keywords: Investment Activism; Governance Controls; Business and Shareholder Relations
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  • November 2017
  • Case

Third Point Paints a Target on Sotheby's

By: Lena G. Goldberg
When faced with the increasing accumulation of its stock by activist investors led by Daniel Loeb’s Third Point LLC and the activists’ stated objective to replace management and at least some Sotheby’s Board members, Sotheby’s, the world’s oldest auction house,... View Details
Keywords: Fiduciary Duties; Activists; Activist Investors; Rights Plan; Poison Pills; Takeover Defenses; Corporate Governance; Laws and Statutes; Lawsuits and Litigation; Ownership Stake; Value Creation; Crisis Management
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  • November 2010
  • Article

A New Era for Raiders

By: Guhan Subramanian
The article presents information on corporate methods of preventing hostile takeovers by corporate raiders, such as the poison pill strategy. It is noted that some of these techniques have become less popular and effective. An argument is presented that Section 203 of... View Details
Keywords: Strategy; Mergers and Acquisitions; United States
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  • January 1999
  • Article

An Analysis of Value Destruction and Recovery in the Alliance and Proposed Merger of Volvo and Renault

By: Robert Bruner
Volvo's attempt to merge with Renault in 1993 temporarily destroyed SEK 8.6 billion (US$ 1.1 billion) in Volvo shareholder wealth. This study traces the destruction to hubris, managerialism, and the escalation of commitment—elements suggested in previous research. In... View Details
Keywords: Mergers ＆ Acquisitions; Institutional Investors; Alliances; Privatization; Mergers and Acquisitions; Institutional Investing; Auto Industry
Related
  • 09 May 2017
  • What Do You Think?

Should Management Be Primarily Responsible to Shareholders?

non-financial goals in judging performance, or greater voice for employees? Or would it return us to a world of poison pill protection against takeovers, less say over corporate matters for shareholders, and... View Details
Keywords: by James Heskett
  • 19 Mar 2012
  • HBS Case

HBS Cases: Overcoming the Stress of ‘Englishnization’

this. Some insist that this is a poison pill that you have to swallow—there's no other choice. Others say: 'This is impossible, the CEO is crazy. How can you do that?' " Neeley argues that chief... View Details
Keywords: by Kim Girard
  • 04 Dec 2007
  • First Look

First Look: December 4, 2007

accretion or dilution to expect based on the terms of a deal. Purchase this note: http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=208059 Evaluating M&A Deals—How Poison Pills Work Harvard... View Details
Keywords: Martha Lagace
  • 29 Jun 2007
  • First Look

First Look: June 29, 2007

with a negotiated deal at $26.50 per share in December 2004. Novel questions of corporate law are raised by the prolonged use of a poison pill against a structurally non-coercive, all-cash, fully-financed... View Details
Keywords: Martha Lagace
  • 01 Mar 2012
  • News

Speak English, Please!

Rakuten.” “Students have strong reactions to this. On the one hand, some insist that this is a poison pill that must be swallowed—there’s no choice,” comments Neeley. “Others say, ‘This is impossible, the... View Details
Keywords: Kim Girard; Miscellaneous Store Retailers; Retail Trade
  • 22 Aug 2007
  • Research & Ideas

The Hedge Fund as Activist

removal of a poison pill (a device that makes it difficult for a firm to be acquired), ask for a share repurchase or dividend increase, or, in extreme cases, ask for the removal of the CEO. While a few... View Details
Keywords: by Robin Greenwood; Financial Services
  • 09 Nov 2010
  • First Look

First Look: November 9, 2010

Era for Raiders Author:Guhan Subramanian Publication:Harvard Business Review 88, no. 11 (November 2010) Abstract The article presents information on corporate methods of preventing hostile takeovers by corporate raiders, such as the View Details
Keywords: Sean Silverthorne