Poison put

Poison put
A covenant allowing the bondholder to demand repayment in the event of a hostile merger.
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poison put
provision in an indenture giving bondholders the privilege of redemption at PAR if certain designated events occur, such as a hostile takeover, the purchase of a big block of shares, or an excessively large dividend payout.

An interesting development of the 1980s, however, was the 'poison put.' In reaction to the large leveraged buyouts of the 1980s, many companies introduced these poison puts to protect bondholders in the event of a leveraged transaction.

Similar financial terms
Poison put
A covenant allowing the bondholder to demand repayment in the event of a hostile merger.
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Corporate bonds that include protective covenants, such as poison puts, are given event risk covenant rankings by Standard & Poor's. Ratings range from E-1 (highest) to E-5 (lowest). Covenant rankings are supplemental to basic bond ratings.

to buy shares of the firm or shares of anyone who acquires the firm at a deep discount to their fair market value. Named after the cyanide pill that secret government agents are said to be instructed to swallow if capture is imminent.
Poison put ...

Takeover; in Play; Insider Trading; Killer Bees; Lady Macbeth Strategy; Leveraged Buyout; Leveraged Recapitalization; Lock-Up Option; Macaroni Defense; Management Buyout; Materiality; Merger; Pac-Man Strategy; People Pill; Poison Pill; Poison Put; ...

See also: Exercise price, Capital markets, PIK, Bond covenant, Funding