What's the difference between "flip-in" and "flip-over" poison pills?

A poison pill is a defense tactic used by corporations to thwart hostile takeovers. The takeover candidate uses a poison pill to make it difficult for the acquirer to take over the corporation. Flip-in and flip-over poison pills offer different defense mechanisms for a takeover candidate. The flip-in poison pill allows the existing shareholders to purchase shares of the targeted company at a discount, while the flip-over poison pill allows existing shareholders of the targeted firm to purchase shares of the acquiring company at a discount.

A flip-in poison pill is a strategy a target company may use to make it difficult for the acquirer to gain control of the company. It is a provision in the takeover candidate's bylaws that gives existing shareholders of the targeted company, excluding the acquirer, the rights to purchase additional shares of the targeted company at a discounted price. This defense tactic dilutes the share price of the targeted company and the percentage of ownership the acquirer may already have.

On the other hand, a flip-over poison pill is a tactic that gives existing shareholders of the targeted firm the rights to purchase shares of the acquiring company at a discounted price. However, this must be included in the bylaws of the acquiring company. These rights only go into effect when a takeover bid arises. The flip-over poison pill encourages existing shareholders of the targeted company to purchase shares of the acquiring company to dilute its share price.