Legal Definitions - structural takeover defense

Structural takeover defense is a legal mechanism adopted by a corporation to prevent hostile takeover attempts without affecting the company's financial or operational status. It is also known as a "shark repellent" defense.

• Poison Pill: A company can issue new shares of stock to existing shareholders, making it more expensive for the acquiring company to purchase a controlling interest. This makes the takeover less attractive and more difficult to achieve.
• Porcupine Provision: A company can adopt a provision that allows shareholders to redeem their shares at a premium if a hostile takeover occurs. This makes the takeover more expensive for the acquiring company and less attractive to shareholders.

These examples illustrate how a company can use structural takeover defense to make it more difficult for another company to acquire a controlling interest. By making the takeover more expensive or less attractive, the target company can discourage hostile takeover attempts and maintain its independence.