The Williams Companies Adopts a Poison Pill

Williams Companies (NYSE: WMB), one of the world's largest natural gas pipeline companies, saw its stock price plummet in recent months. This precipitous drop in price seems to have made the board nervous that some other company might try to take Williams over while the stock was so cheap -- so the company adopted a "poison pill" provision to thwart such attempts. That's probably for the best, since those shareholders not attempting a mutiny will come out better off. 

IMAGE SOURCE: GETTY IMAGES

Takeover attempts happen often in the public markets. If a takeover is possible, it's safe to assume that a stock is trading at a lower price than what the acquirer thinks it should be trading at. Typically, companies can see takeover attempts coming, because the acquirer will start purchasing a large quantity of shares. Companies can institute a defensive measure with their common stock known as a "poison pill."

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Source Fool.com