ALL about Poison Put

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Summary

What is a Poison Put? Meaning.

A Poison Put in M&A and/or Corporate Finance is a provision in a corporate bond or note that gives its holder the option of redeeming the bond or note at its (high) par value if certain events occur. These events may include a restructuring, the payment of a large dividend or an unfriendly takeover.

Poison-put bonds can act as an anti-takeover mechanism because they discourage acquiring companies by raising their expenses.

They also protect the bondholder from the deterioration of credit quality and credit rating that might result from a leveraged buyout that added to the issuer’s debt.

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