The Jonestown defense is an extreme

corporation A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...

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 publicly listed, in contrast to the acquisi ...

s. In this strategy, the target

firm A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

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", 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, an American religious movement under the leadership of Jim Jones. Jonestown became in ...

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

Guyana Guyana, officially the Co-operative Republic of Guyana, is a country on the northern coast of South America, part of the historic British West Indies. entry "Guyana" Georgetown, Guyana, Georgetown is the capital of Guyana and is also the co ...

, where

Jim Jones James Warren Jones (May 13, 1931 – November 18, 1978) was an American cult leader, preacher and mass murderer who founded and led the Peoples Temple between 1955 and 1978. Jones and the members of his inner circle planned and orchestrat ...

led the members of the Peoples Temple to kill themselves. Jonestown Defense maneuvers are usually more extreme versions of existing tactics;

share buyback Share repurchase, also known as share buyback or stock buyback, is the reacquisition by a company of its own shares. It represents an alternate and more flexible way (relative to dividends) of returning money to shareholders. Repurchases allow s ...

s (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 goods or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create and ...

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, co ...

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

References

See also