Poison Pill

Poison pill is strategy used by corporations to discourage a hostile takeover by another company. The target company attempts to make its stock less attractive to the acquirer.

FLIP-IN
By purchasing more shares cheaply (flip-in), investors get instant profits and, more importantly, they dilute the shares held by the competitors. As a result, the competitor's takeover attempt is made more difficult and expensive.

FLIP-OVER
Flip-over is when shareholders have the right to purchase stock of the acquirer on a 2-for-1 basis in any subsequent merger.

This is similar to the macaroni defense, except it uses equity rather than bonds.

source: http://www.investopedia.com/terms/p/poisonpill.asp

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