Flip-Over Poison Pill - CFAI Vol. 3 pg. 253

I understand the effect of the Flip-Over Poison Pill takeover defense as it would dilute the acquiring company’s shares (which is essentially a big “F U” by the target company). But its not quite clear to me how the target company can offer the acquiring company’s shares at a discount in order to do this?? What allows them to offer someone else’s shares at a discount? Am I missing something?

Under 60 days out, quit worrying about the ‘how’ and focus on retaining all of this material. A flip-over pill is where the target’s shareholders have the right to buy the acquirer’s shares at a discount. I suggest leaving it at that for now, and unless not knowing how this works is affecting your career somehow, worry about the details after the exam. My $0.02

While I appreciate the advice, I’d still like to know… it kinda bugs me for whatever reason that I am not connecting the dots haha. Does anyone have any experience with this, or has anyone seen how it works? If not I’ll just take cajones’ advice and keep plugging away. Thanks!

I know, it happens all the time to me also – especially when studying Schweser.