The Jonestown defense is an extreme

corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...

defense against hostile

takeover In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...

s. In this strategy, the target

firm A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared go ...

engages in tactics that might threaten the firm’s existence to thwart an imposing acquirer’s bids. This is also known as a "

suicide pill A suicide pill (also known as the cyanide pill, kill-pill, lethal pill, death-pill, or L-pill) is a pill, capsule, ampoule, or tablet containing a fatally poisonous substance that a person ingests deliberately in order to achieve death quickly th ...

", and is an extreme version of the poison pill.Jonestown defense investorwords.com
/ref> The term refers to the 1978

Jonestown The Peoples Temple Agricultural Project, better known by its informal name "Jonestown", was a remote settlement in Guyana established by the Peoples Temple, a U.S.–based cult under the leadership of Jim Jones. Jonestown became internationall ...

mass suicide Mass suicide is a form of suicide, occurring when a group of people simultaneously kill themselves. Overview Mass suicide sometimes occurs in religious settings. In war, defeated groups may resort to mass suicide rather than being captured. Su ...

in Guyana, where

Jim Jones James Warren Jones (May 13, 1931 – November 18, 1978) was an American preacher, political activist and mass murderer. He led the Peoples Temple, a new religious movement, between 1955 and 1978. In what he called "revolutionary suicide ...

led the members of the

Peoples Temple The Peoples Temple of the Disciples of Christ, originally Peoples Temple Full Gospel Church and commonly shortened to Peoples Temple, was an American new religious organization which existed between 1954 and 1978. Founded in Indianapolis, Ind ...

to kill themselves. Jonestown Defense maneuvers are usually more extreme versions of existing tactics; share buybacks (which increase stock prices and decrease public equity at the cost of cash or debt financing), Crown Jewel maneuvers (selling off attractive assets at a discount to anyone except the acquirer) and similar. The main difference is that they are done to such an extreme that they threaten the company's livelihood. Companies attempting such maneuvers may thus find themselves insolvent, and in a position where they cannot resist continued takeover bids. The flip side is that the tactics reduce the company's value to potential buyers such that, unless the firm still possesses intangible assets (like a

brand name A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create an ...

or other

intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...

) that are valuable to the acquirer, the acquisition of this now-troubled firm becomes extremely unappealing.

References

See also