Legal Definitions - shark repellent

Shark repellent is a term used in business to describe a strategy or provision that a company puts in place to prevent a hostile takeover. This means that if another company tries to buy a controlling interest in the company, the shark repellent provision will make it difficult or impossible for them to do so.

One example of a shark repellent provision is a "poison pill." This is when a company issues a large number of new shares of stock, which dilutes the value of the existing shares. This makes it more expensive for the acquiring company to buy a controlling interest in the company.

Another example is a "golden parachute." This is when a company offers its top executives large payouts if the company is acquired and they lose their jobs. This makes it less attractive for the acquiring company to take over the company, as they will have to pay out large sums of money to the executives.

These examples illustrate how shark repellent provisions can make it difficult for another company to take over a company. By making it more expensive or less attractive to acquire a controlling interest, the company can protect itself from hostile takeovers.