Aphria Inc. APHA

A poison pill strategy APHA could use

[jayjay2020]

1. A “flip-in poison pill” strategy involves allowing the shareholders, except for the acquirer, to purchase additional shares at a discount. While usual investors purchase the additional shares as it provides them with instantaneous profits, the practice dilutes the value of the limited number of shares already purchased by the acquiring company. This right to purchase is given to the shareholders before the takeover is finalized, and is often triggered when the acquirer amasses a certain threshold percentage of shares of target company. Say, a flip-in poison pill plan is triggered when the acquirer purchase 30 percent of target company’s shares. Once triggered, every shareholder, excluding the acquirer who bought 30 percent, is entitled to buy new shares at a discounted rate. The greater the number of shareholders who buy additional shares, the more diluted the acquirer’s interest becomes and the higher the cost of the bid. As new shares make way to the market, the value of shares held by acquirer reduces thereby making the takeover attempt more expensive and more difficult. I