A poison pill is a tactic by directors of a company to make it more difficult for someone to take over the company from outside that the directors do not want to see in control. They take on many forms, the most common being granting special rights to existing shareholders to thwart a hostile takeover attempt.
As an example, if a person (or affiliated group), whom the directors do not want to be in control gains a specified percentage of the company (such as 5%, which is the percentage required by American securities laws whereupon a person or company must report the purchase and state its intentions), the directors would invoke a provision which would give existing shareholders either actual additional company shares, or the right to purchase them at a deeply discounted price from the market value.
The use of poison pills has been commonly associated with companies not wanting to deal with T. Boone Pickens or Carl Icahn, both corporate "raiders" in their own right. More recently, in 2022 the directors of Twitter announced such a plan after Elon Musk purchased a significant share of the company and made a cash offer for the remainder.
Poison pills often harm the overall value of the company, and interfere with the free market. They can have political or emotional motivations, such as keeping entrenched management in power.