Final answer:
A poison pill defense is established to prevent hostile takeovers and becomes effective when activated by certain conditions. It differs from greenmail, public relations campaigns, and targeted shareholder agreements, and is unrelated to predatory pricing, trade secrets, or trademarks.
Step-by-step explanation:
Generally, a poison pill defense is established as a pre-offer strategy that remains dormant until the right set of circumstances activates its operation. Poison pills are a form of corporate defense against a takeover, wherein the target company makes its stock less attractive to the prospective acquirer. This can be done by offering existing shareholders the right to purchase additional shares at a discount, effectively diluting the ownership interest of the new, hostile party.
While poison pills are designed to protect a company from a hostile takeover, they work differently from other strategies such as greenmail arrangements, public relations campaigns, and targeted shareholder agreements. In contrast, greenmail is a situation where a large shareholder is bought out at a premium to prevent a takeover, and public relations campaigns may involve outside lobbying to create an environment that is not conducive to takeover attempts. Targeted shareholder agreements are pacts between certain shareholders to act in concert on specified matters.
Furthermore, poison pill strategies do not necessarily relate to tactics such as predatory pricing, protecting trade secrets, or registering a trademark. These are separate business strategies and legal concepts used to either impede competition or protect the assets and identity of a company.