The objective of this paper is to analyze one of the possible effects of dispersed shareholding: hostile takeovers and the use of so-called poison pill defense mechanisms. For this, I study the phenomenon of dispersed shareholding, the possible forms of controlling companies with this type of ownership structure, public tender offers to acquire control of listed companies, and after a brief description of the most famous and extreme type of protection mechanism against hostile takeovers — the shark repellent — I examine the less extreme poison pill mechanism as used in Brazil in detail. In this respect, I explain the differences between the original concept of poison pills as developed in the United States and way this mechanism is being used in Brazil. I also analyze the diffusion and the main discussions on the use of this mechanism in the Brazilian capital market.
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Carlos Martins Neto
