what is the poison pill defense 
a poison pill defense is a strategy employed by a company to prevent a hostile takeover it is used when a potential acquirer owns a large portion of a company s outstanding shares a poison pill strategy allows existing shareholders but not the potential acquirer to purchase additional shares at a discounted price thereby diluting the value of the potential acquirer s shares to control a significant portion of the company again the potential acquirer would have to spend more money purchasing shares making the attempted takeover more expensive 