Return of the Poison Pill

Shareholder rights plans (also known as poison pills) saw a resurgence in early 2020 as public company boards began to worry about vulnerability to activist funds and potential opportunistic acquirers due to depressed share values. The sharp pandemic-caused drop in market prices in February and March of 2020 led to this sense of vulnerability. The report provides brief background on poison pills, and looks at 97 pills adopted from Jan 2020 through June 2021. While the adoption of poison pills in response to Covid-19 slowed after the initial period of market panic, the sudden return of the takeover defense provided a roadmap for future periods of uncertainty or instability where companies may choose to adopt poison pills to try to protect themselves from periods of systemic short-term stress.