Is HP’s “Poison Pill” Defense Against Xerox Toxic for Investors?

It's been a busy week for HP (NYSE: HPQ) investors.

On Feb. 20, the PC and printer maker adopted a shareholder rights plan to fend off Xerox's (NYSE: XRX) hostile takeover bid. The "poison pill" plan would allow HP's current investors to buy additional shares at a discount if a single stakeholder accumulates over 20% of the company's existing shares.

That condition, which will last for a full year, would dilute Xerox's stake and make it difficult to hit the 80% threshold required for its tender offer to be approved. HP calls the plan a defensive move against Xerox's "coercive tactics to gain control without paying all shareholders an appropriate premium."

Source Fool.com