A poison pill is A strategy used by corporations to discourage hostile takeovers. With a poison pill, the target company attempts to make its stock less attractive to the acquirer. There are two types of poison pills:
1. A "flip-in" allows existing shareholders (except the acquirer) to buy more shares at a discount.
2. A "flip-over" allows stockholders to buy the acquirer's shares at a discounted price after the merger.
1. By purchasing more shares cheaply (flip-in), investors get instant profits and, more importantly, they dilute the shares held by the acquirer. This makes the takeover attempt more difficult and more expensive.
2. An example of a flip-over is when shareholders gain the right to purchase the stock of the acquirer on a two-for-one basis in any subsequent merger.
The mobile platform is an imperative for Microsoft. You are correct on that. But that doesn't mean Microsoft has to buy them.
The already are committed to giving Nokia $250M per quarter for five years as part of the joint venture. Why should Microsoft do any more than that? Nokia doesn't need more than that. There is no need for an acquisition or any type of cash infusion.
I agree that MSFT should not buy Nokia in current situation. "Poison bill" in Nokia's Articles of association says that the buying price should be at least 12 months moving average of the share price which is currently some 3.5 euros i.e. some 4.30 $ per share.
4.3 $ is definately too when share price is 2.40 $. But what about 3 euros or 3.7 $ per share? 12 m moving average is declining fast.
They would save 250 M per quarter and own whole company :-)