Definition Flip-in. Description.
A Flip-in is an anti-takeover technique described in the
Corporate Charter or bylaws
that gives certain shareholders of the targeted company the right to buy additional
shares in the target company at a deep discount, usually half price, if a
hostile bidder acquires a certain threshold (usually 15 to 20 percent) of
the outstanding shares.
The Flip-in plan's deterrent effect thus comes from the dilution
caused in the target shares held by the acquirer.
No potential acquirer or other shareholder will risk to trigger
a Flip-in poison pill by accumulating more than the threshold level of shares
because of the threat of massive discriminatory dilution. The threshold level
therefore effectively sets a ceiling on the amount of stock that any shareholder
can accumulate before launching a proxy contest.
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Compare with:
Anti Hostile Takeover
Mechanisms | Flip-over
| Targeted Repurchase
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