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A shark repellent, also known as a porcupine provision, is a strategy used by corporations to fend off unwanted or hostile takeover attempts.

Examples shark repellent:

Fair Price Provision Requires a bidder to pay the same price to all shareholders. This raises the stakes and discourages tender offers designed to attract only those shareholders most eager to replace management.

Golden Parachute A contract with top executives that makes it prohibitively expensive to get rid of existing management.

Defensive Merger The target company combines with another organization that would create antitrust or other regulatory problems if the original, unwanted takeover proposal was consummated.

Staggered Board of Directors Makes it more difficult for a corporate raider to install a majority of directors sympathetic to his or her views.

Supermajority Provision Increases the shareholder vote required to ratify a takeover from a simple majority to two-thirds or three-fourths.

Although arguably well intentioned, many shark repellent measures are not in the best interests of shareholders as they may damage the company’s financial position and interfere with management of the company. What is more, shark repellents often benefit corporate officers more than the shareholders.