Flipover

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A flip~over is one of five types of poison pills in which current shareholders of a targeted firm will have the option to purchase discounted stock after the potential takeover. Introduced in late 1984 and adopted by many firms, the strategy gave a common stock dividend in the form of rights to acquire the firms common stock or preferred stock above market value. Following a takeover, the rights would flip over and allow the current shareholder to purchase the unfriendly competitors shares at a discount. If this tool is exercised, the number of shares held by the unfriendly competitors will realize dilution and price devaluation.