Shark Repellent

measure undertaken by a corporation to discourage unwanted takeover attempts. Also called porcupine provision. For example: (1) fair price provision requiring a bidder to pay the same price to all shareholders. This raises the stakes and discourages tender offers designed to attract only those shareholders most eager to replace management.
(2) golden parachute contract with top executives that makes it prohibitively expensive to get rid of existing management.
(3) defensive merger, in which a target company combines with another organization that would create antitrust or other regulatory problems if the original, unwanted takeover proposal was consummated.
See also safe harbor.
(4) staggered board of directors, a way to make it more difficult for a corporate raider to install a majority of directors sympathetic to his or her views.
(5) supermajority provision, which might increase from a simple majority to two-thirds or three-fourths the shareholder vote required to ratify a takeover by an outsider.
See also poison pill; Scorched-Earth Policy.

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Slang term for any one of a number of measures taken by a company to fend off an unwanted or hostile takeover attempt. In many cases, a company will make special amendments to its charter or bylaws that become active only when a takeover attempt is announced or presented to shareholders with the goal of making the takeover less attractive or profitable to the acquisitive firm.

Also known as a "porcupine provision".

Investopedia Says:
Most companies want to decide their own fates in the marketplace, so when the sharks attack, shark repellent can send the predator off to look for a less feisty target.

While the concept is a noble one, many shark repellent measures are not in the best interests of shareholders, as the actions may damage the company's financial position and interfere with management's ability to focus on critical business objectives. Some examples of shark repellents are poison pills, scorched earth policies, golden parachutes and safe harbor strategies

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