This document summarizes and discusses the use of "poison pill" defensive tactics by corporate boards. It notes that boards have broad discretion but poison pills should reasonably address threats. The "NOL poison pill" that triggers at only 5% ownership to prevent loss of tax assets is discussed. While this tactic aims to protect valuable tax assets, it may be pretextual and actually serves to deter activist shareholders rather than genuine threats. The document concludes that boards have discretion but very low-trigger pills could excessively limit shareholder voice.
It is comprehensive Presentation covering all the aspects of Takeover defenses like
Active Takeover Defense and Preventive Take over Defense
Hope you enjoy reading it as much as i enjoyed working it
It is comprehensive Presentation covering all the aspects of Takeover defenses like
Active Takeover Defense and Preventive Take over Defense
Hope you enjoy reading it as much as i enjoyed working it
Hostile Takeover Strategies with Analysis of Case StudiesPavan Kumar Vijay
Hostile Takeover, acquisition of a business by making unsolicited bids and giving attractive offers to the stakeholders to amass the controlling share and then bid to take control of the business and the management. The acquirer attempts to acquire a business by convincing small shareholders and financial institution of bright future prospects and also give them much larger premium for their shares. This is done to get an upper hand in that specific segment of Industry as well as market by acquiring an established business with proven track records.
How much negative this kind of takeover may look, there are many positive outcomes too. A bid of hostile takeover compels the management to work efficiently, true value of a business comes to fore, shareholders get an opportunity to sell their stake at a good premium etc.
Learn from Jeffrey Char (President & CEO of J-Seed Ventures, serial entrepreneur) how to negotiate a typical venture capital term sheet.
Takeaway
-understand the terms & conditions of a term sheet
-negotiating and structuring investment deals
-negotiating terms for the benefit of founding team
The MSA Launch (http://bit.ly/1yhQPZV) is a 5-day event aiming to provide an introduction to MaGIC Academy. It is presented as a condensed version of how MaGIC Academy is going to contribute to you and the startup community. You will be able to experience a series of workshops, skill and sharing knowledge opportunity, and mentoring with our selected network of mentors.
Website : www.mymagic.my
Facebook : https://www.facebook.com/magic.cyberjaya
Twitter : https://twitter.com/magiccyberjaya
Youtube :
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A Case study on mergers and acquisitions
we have in the folder - Types of Acquisitions what all is required for an acquisition and the legal aspects for it.
Also, Advantages and disadvantages of Mergers and Acquisition (M&A)
Mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location.
Hostile Takeover Strategies with Analysis of Case StudiesPavan Kumar Vijay
Hostile Takeover, acquisition of a business by making unsolicited bids and giving attractive offers to the stakeholders to amass the controlling share and then bid to take control of the business and the management. The acquirer attempts to acquire a business by convincing small shareholders and financial institution of bright future prospects and also give them much larger premium for their shares. This is done to get an upper hand in that specific segment of Industry as well as market by acquiring an established business with proven track records.
How much negative this kind of takeover may look, there are many positive outcomes too. A bid of hostile takeover compels the management to work efficiently, true value of a business comes to fore, shareholders get an opportunity to sell their stake at a good premium etc.
Learn from Jeffrey Char (President & CEO of J-Seed Ventures, serial entrepreneur) how to negotiate a typical venture capital term sheet.
Takeaway
-understand the terms & conditions of a term sheet
-negotiating and structuring investment deals
-negotiating terms for the benefit of founding team
The MSA Launch (http://bit.ly/1yhQPZV) is a 5-day event aiming to provide an introduction to MaGIC Academy. It is presented as a condensed version of how MaGIC Academy is going to contribute to you and the startup community. You will be able to experience a series of workshops, skill and sharing knowledge opportunity, and mentoring with our selected network of mentors.
Website : www.mymagic.my
Facebook : https://www.facebook.com/magic.cyberjaya
Twitter : https://twitter.com/magiccyberjaya
Youtube :
SlideShare : http://slidesha.re/1BfSncP
Email : enquiries@mymagic.my
A Case study on mergers and acquisitions
we have in the folder - Types of Acquisitions what all is required for an acquisition and the legal aspects for it.
Also, Advantages and disadvantages of Mergers and Acquisition (M&A)
Mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location.
Topic 1 Product DesignList and describe briefly the element.docxturveycharlyn
Topic 1: Product Design
List and describe briefly the elements of Product Design. Select one and apply it to a product you would like to see created in the marketplace.
Topic 2: Service Design
List and describe briefly the elements of Service Design. Consider a service industry and create a short service blueprint, a series of events that has at least 5 steps. Then describe each step with a short paragraph under each step.
Topic 3: VCA, RBV, and SWOT Analyses
Discuss how you can use VCA, RBV, and SWOT analyses to gain a stronger sense of what might be a firm’s key building blocks are for a successful strategy.
Choose a Fortune 1000 company to demonstrate these aforementioned analyses.
Please remember to use APA citation (text and list references) to further validate your initial responses. Take time to review the responses of your classmates and provide your feedback.
Topic 4:
The concept of best practices is simple: Do not recreate the wheel.
For this week's Discussion, please research and find an article relating to best practices that you find truly interesting. Find a company or situation that created a best practice that others follow, or find a best practice that was implemented and proved effective, efficient, and innovative.
Answer the following questions relating to the article and your own experience with best practices:
Please describe the background for the article you researched and explain why this particular best practice scenario appealed to you. What did you learn from the situation that you could apply to your own life?
Best practices are for not only our professional lives, but our personal lives as well. Please describe a situation in your life that needed some type of improvement and, after observing someone else in a similar situation handle things differently, how you decided to implement your own best practice. Is this best practice still effective, or have you improved it?
Second exam
Continue Corporation ….
(Read about this take over on page 1087 important )
The difference of public company and private company is that public company’s shares are freely transferable and everyone can buy the shares from public market .
Merger of acquisiton - ( take over ) is the long process which is based on the decision of board of directors .
Poison pill – deters hostile takeover attempts by threatening the raider and its shareholders with severe dilutions in the value of the shares they hold
In the Paramount case – the acquired company is <Time> what decision did the directors of Time make , preservation , long term shareholders value,
If directors make a decision based on their interest rather than company’s interest , they will violate business judgment rule and will be held liable for that
If the company create a long run acquisition strategy and follow it that should be good in the court , in this case the time had long run strategy to expand their business . So they can accept the lower price but ...
Legal aspects of mergers and acquisition
Acquisition is the combination of two companies where one corporation is completely absorbed by another corporation. The less important company loses its identity and becomes part of the more important corporation, which retains its identity. It may involve absorption or consolidation.
Merger is also defined as amalgamation. Merger is the fusion of two or more existing companies. All assets, liabilities and the stock of one company stand transferred to Transferee Company in consideration of payment in the form of:
I) Equity shares in the transferee company,
II) Debentures in the transferee company,
III) Cash, or
IV) A mix of the above mode
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Mohammad Abadullah
Dilruba Jahan Popi
Rabiul Islam
Effat Ara Saima
MD. Rajib Mojumder (Captain)
Chapter1B) Describe the organizational forms a company might h.docxchristinemaritza
Chapter1
B) Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
There is three principal form of organization.
· Proprietorship: Which is an unincorporated business owned by one individual.
· Partnership: Exists whenever two or more persons or entities associate to conduct a noncorporate business for profit.
The Proprietorship and Partnership have a similar advantage and disadvantage.
Advantage:
1) It has an easy process and not expensive formed.
2) The government regulations for these forms are few.
3) The Income is not subject to corporate tax but is treated as part of proprietor's personal income.
Disadvantages:
1) It could be difficult for the proprietor's in these kind of form to obtained the capital need to growth.
2) The proprietor and the partners are liable for the company’s liabilities, which can affect their personal property. Regarding partnership, they could avoid that by the limited partner so one will be a general partner and have unlimited liability, and returns. The second one will be a limited partner and have limited liability, and returns.
3) The life of the company in case of proprietorship is limited to the life of its founder.
4) Some times a problem could appear between the partners.
· Corporation: A legal entity created under state laws, and it is separate and distinct from its owners and managers.
Corporation’s advantages:
1) The corporation has an unlimited life and its separate from its owners and managers.
2) The transfer of ownership interests is easier than the Proprietorship and Partnership.
3) It has a limited liability up to the amount invested in the organization.
4) It is relatively easy for a corporation to get capital markets for its growth plans.
Corporation’s disadvantages:
1- A corporation is subject to double taxation system. Therefore, it is subject to a corporation tax and earnings paid out as dividends to its shareholders are taxable as income of the shareholders.
2- complex and time-consuming set of regulations as compared to partnerships and proprietorship. That need to prepare the charter and the bylaws.
D) What should be the primary objective of managers?
The primary objective of managers is stock holder wealth maximization.
1- Do firms have any responsibilities to society at large?
Companies should operate regarding their manager’s concern as well as their employees benefit and good work environment including laws and rules, also act in an ethical manner and the good for their communities and society.
2- Is stock price maximization good or bad for society?
It’s good because of three reasons:
a) When managers take an action that maximizes the stock price that will improve the quality of life for ordinary citizens.
b) Consumer benefit because stock price maximization needs efficient and low-cost business that produces high-quality products and services at low costs.
c) Employees ...
Ben and Jerrys Homemade This case examines issues of asset contro.pdfkostikjaylonshaewe47
Ben and Jerry\'s Homemade: This case examines issues of asset control for Ben & Jerry\'s
Homemade, Inc., in light of the outstanding takeover offers by Chartwell Investments, Dreyer\'s
Grand, Unilever, and Meadowbrook Lane Capital in January 2000. We can observe the
fundamental firm objectives expressed in the company\'s mission statement and the company\'s
development of a strong social consciousness; but we might question the implications of poor
financial performance combined with takeover defense mechanisms to protect management\'s
control of company assets. Should the board defend the agenda of the current management team
or should it accept one of the takeover offers?
Study Questions Case 3: Ben & Jerry\'s Homemade, Inc.
1. What evidence can you provide regarding its financial performance?
3. Why did Ben & Jerry\'s become a takeover target?
4. Who ultimately controls the assets of Ben & Jerry\'s?
5. What is the impact of the asset-control devices used by management and the state of
Vermont?
6. What other common takeover defense strategies (both pre-offer and post-offer) could be
employed?
7. With respect to the takeover offers currently on the table, are the offer prices high enough?
8. Should the board defend the agenda of the current management team or should it accept one
of the takeover offers?
Solution
The board should accept the offer as it will increase the shareholders intetest.
1. The financial performance can be proved through its financial statements. The financial
statements provides information about the financial and profitability growth. The return on
equity goes up from - 2.6% to 8.9% from year 1994 to 1999.
3. The market share in the industry was unbalanced i. e., 45% as compared to low financial
power, strength and growth which results in the underperformance and the dissatisfaction among
the investors which redults in giving the offers to the hungry investors by the competitors . ..
4.The ultimate control of the assets of Ben & Jerry\'s was limited to company\'s charter,
differential stock voting rights and supportive vermomt legislature.
5.The impact of assets control device used by management and state of Vermont are making
Board of Directors (BOD) which have an ultimate control and offer the company against other
shareholders as on getting the more value in Ben & Jerry.
6. Defense strategies
SUPER MAJORITY : A corporate amendment made in company’s charter whicg require a large
majority of the shareholders to approve important charge such as merger. .
STAGGERED BOARD : It is a board that is made up of different classes of Directors.
POISION PILL: It is atactic utilized by the companies to prevent the hostile takeover..
LIABILITY RESTRUCTURING : The method which is used by thr company in order to get
some advantage with outstanding debt to alter the terms of debt agreements.
7. When we assess the the offer the Unilever is the highest offer bidder with $ 35 (cash) . Its
huge market share in ice cream industry and its .
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Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
ALL EYES ON RAFAH BUT WHY Explain more.pdf46adnanshahzad
All eyes on Rafah: But why?. The Rafah border crossing, a crucial point between Egypt and the Gaza Strip, often finds itself at the center of global attention. As we explore the significance of Rafah, we’ll uncover why all eyes are on Rafah and the complexities surrounding this pivotal region.
INTRODUCTION
What makes Rafah so significant that it captures global attention? The phrase ‘All eyes are on Rafah’ resonates not just with those in the region but with people worldwide who recognize its strategic, humanitarian, and political importance. In this guide, we will delve into the factors that make Rafah a focal point for international interest, examining its historical context, humanitarian challenges, and political dimensions.
2. Main Problem of Corporate Law
Agency cost problem between shareholder-owners and
managers.
Corporate statutes & common law use fiduciary duties
in an attempt to restrict managers
But, the Business Judgment Rule and other hurdles,
insulate directors from claims of substituting their
decisions for the will of the shareholders
I.e. Managers have more power, but there are attempts
to balance the two sources of power
3. What’s this mean?
The fiduciary duties (care, loyalty) that
historically have protected the will and rights
of shareholders have been eroded
The duty of care has been gutted by Del.
caselaw and Del. 102(b)(7) – opt out of duty
of care
What’s left: Duty of loyalty claims arguing 1)
self-dealing or 2) entrenchment
4. This affects the M&A arena
An M&A transaction is one of the biggest events
for a company, comparable to it’s IPO.
The 1980’s saw a rash of M&A activity
To gain control, large players employed tactics
such as the hostile takeover, two-tier tender offer,
and proxy fight.
In response, Management created defensive
tactics to hold off unwanted M&A activity.
5. M&A activity has the highest risk of loyalty
violations because management is looking to
keep itself in power over what is generally a
premium offer by bidder.
Entrenching v. selling over the market price
Loyalty problem – conflict of interest
6. Therefore
Because of these developments, Del courts
have created an intermediate level of scrutiny
to test board decisions involving these
presumed loyalty claims
Under Unocal and its progeny, Del courts first
look to 1) the reasonableness of the board’s
identified threat and 2) the reasonableness of
the response in relation to the threat
This 2-prong test comes before deciding if
decision should be scrutinized under BJR
7. If a corporate transaction gets BJR…
What’s likely to happen?
The board’s defensive tactic will almost always stand as
being within the board’s discretion
Why does this make sense?
Because a board must report to the shareholders its
reasons for turning down some M&A activity or to ask to
implement defensive tactics, so they must explain their
decision and operate under their fiduciary duty
Also, it provides the shareholders with something tangible
to go after management now if they feel the outcome was
in the shareholder’s best interest
8. So what are corporate boards
doing to protect themselves now?
Poison Pills
Pac Man
Dead Hand
No Hand
Shareholder Rights Plan
Voting Rights Plan
Staggered Board
Increasing Debt
Flip In/Flip Out Provisions
9. Usually, poison pills do their job.
Would-be acquirers make tender offers subject to
revocation of the poison pill
The board digs in
Some shareholders sell to speculators as offers increase
or attract higher competing offers
And the board is legally justified in choosing the highest
bidder or even none at all.
10. Scholars disagree on whether poison
pills are value-reducing to
shareholders in robbing them of higher
premiums paid by either the first or
subsequent acquirers.
11. Against a backdrop of growing deference to
management in implementing poison pills, a new threat
to board authority has emerged: the activist shareholder
Activist shareholders are not looking for control of a
corporation, but for access to the board to argue for
changes in strategy
12. Those defensive tactics I mentioned earlier do not work
on them because they are not looking for total control.
Most “garden variety” poison pills have a 15-20% trigger.
Activist shareholders are only looking to hold stock in the
5-10% range.
13. Del Case Law has provided boards with power against
these large blockholders though
Airgas allowed a company’s board to keep a poison pill
in place for a year even though there wasn’t much of a
threat
Selectica allowed a poison pill that triggered at 4.99%,
the lowest yet, under only the threat that the “ownership
change” would trigger loss of a corporate asset, NOL
carryovers, and not a loss of true control/ownership
14. So what happened in Selectica?
Over time, management has gotten better at
fashioning creative defensive measures.
Here comes the NOL poison pill.
Under IRS Code 382 when a shareholder
purchases shares in an amount that would
trigger an “ownership change” ~5%, a
company can lose the use of it’s NOL
carryvers
15. Selectica
Management, under threat that they were
going to lose their NOL’s, a basically
invaluable corporate asset, went to the
shareholders and asked to amend their
charter to allow the shareholder rights plan to
trigger at 4.99% from 15%.
Del Supreme Court upheld this defensive
tactic
16. It is the Selectica case that is the focus of this paper
because of the use of the NOL poison pill.
The author argues that the NOL poison pill is the newest
and most threatening defensive tactic employed that is
unreasonable to the threat posed
Because it really only wards of activist shareholders
And it is ineffective at holding off 3 other characters: the
Hostile Acquirer, the Bad Faith Saboteurs, and the
Accidental Bungler
17. NOL’s
NOL = Net Operating Loss under Tax Code
section172
NOL = Deductions > Taxable Income
18. NOL’s
If you, corporation, made $1,000 but had
$3,000 in deductions, you’d be bummed
because you’d waste $2,000 of those
deductions
IRS doesn’t want you to be bummed
They allow you to carryover those losses for
20 years.
Thus you could be in biz for a long time
operating on debt/equity financing and not
earn a lot of profits, causing you to accrue
large losses over the years
19. NOL’s
Take Selectica for example.
They had $165 mil in NOL carryovers yet only
had a market worth of $23 million
If a bidder comes in who made $300 mllion
this year and only has $100 million in
deductions.
Bidder would want to buy Selectica because
the additional $165 mil will boost his
deductions to $265 mil.
20. Section 382
However, the IRS has created rules that
acquisitions are supposed to be tax-neutral
I.e. corporations aren’t supposed to think of tax
consequences in mind when making an
acquisition.
As such, there are penalties if Bidder does exactly
what we said in last slide.
IRS is a tricky group…doesn’t want you to be
bummed…but still bums you out in the end
21. Consequences
If the business is no longer a going concern
within 2 years after acquisition, then the NOL
carryovers are reduced to zero.
If the business continues, the NOL’s still suffer
a limitation:
Can only claim-
Value of company as calculated by the value of
its outstanding stock multiplied by the long term
exempt rate
22. That begs the question:
Then is the loss of NOL carryovers due to an
“ownership change” under 382 really a threat?
They’ll be limited or gone altogether if an acquisition
occurs or someone crosses the 5% threshold.
What are the value of these NOL’s to a company?
To Selectica, they were worth $9 mil in the end.
Author argues they’re really near zero.
23. Time for a discussion on
The Hostile Acquirer Threat
Does not deter
Going to value NOL’s at zero anyway because it wants to
acquire corp
A bidder that values the NOL’s here understands the dilution
and wouldn’t proceed with the aquisition
The Bad Faith Saboteur Threat
Rare
May be a competitor in industry or by holdings
Going to happen anyway
The Accidental Bungler Threat
Going to cross the 5% line without knowing
Rules allow buy backs to get this guy back below the threshold
24. Strategic Use of Poison Pill
Very lower trigger with very low threat
Centered on thwarting nuisance factor of
activist shareholders
Del Courts have essentially blessed two-tier
defense tactics while sending two-tier bids to
the dump bin of history
25. Who is using the NOL Poison Pill
Largely microcap companies (<300 mil)
Some nanocap companies (<50 mil)
And some big firms (>1 bil)
155 unique firms implement NOL pill from 1998-
2014
Two-thirds adopted the poison pills after January
2008, and in 2009, forty-four firms adopted poison
pills, four times as many as in 2008
45 firms are in the Finance, Insurance and Real
Estate Industries
26. Author’s recommendations about
NOL Poison Pill
Under 1st prong of Unocal:
Del Court should include determination of
whether companies are pretextually claiming
the NOL’s are valuable and worthy of protection
from threat
Under 2nd prong of Unocal
Del Court will still have to decide if 5% threshold
would be preclusive at a major corp because
the Plan B proxy fight would be near impossible
to attain.
27. Conclusion
Whether one ascribes to the agency theory of
shareholder primacy or the contractarian
theory of director primacy, boards of directors
have great discretion in determining whether,
when and how to sell the corporation.
Defensive tactics, like poison pills, can be
tools in wielding that discretion in the service
of creating shareholder value.
28. Conclusion
However, a poison pill either to oppress a
minority shareholder or to minimize the impact
of activist shareholders, seems to exceed the
“maximum dosage” of the pill.
The NOL poison pill, while facially plausible as
a tool to protect tax assets from impairment,
may be a stepping stone to a low-trigger anti-
shareholder pill.
Instead of warding off uninvited potential
acquirers, the pill could ward off shareholder
voice.