A poison pill, which is officially known as a shareholder rights plan, is a common defense against a hostile takeover. There are two types of poison pill defenses: the flip-in and flip-over. A flip-in allows existing shareholders to buy new stock at a discount if someone accumulates a specified number of shares of the target company. The acquiring company is excluded from the sale and its ownership interest becomes diluted. A flip-over strategy allows the target company's shareholders to purchase the acquiring company's stock at a deeply discounted price if the takeover goes through, which punishes the acquiring company by diluting its equity.