XYZ Adopts Shareholder Rights Plan
“XYZ today announced that its Board of Directors adopted a Shareholder Rights Plan. The Rights Plan is designed to enable all of the Company’s shareholders to realize the full long-term value of their investment and to provide for fair and equal treatment for all shareholders in the event that an unsolicited attempt is made to acquire the Company.”
You may have seen a number of these “shareholder Rights Plans” or as we used to call them Poison Pills. Interesting that companies that used to be very proud of not having anything that would hinder an acquisition now are rolling out poison pills with vigor. I think board members should think long and hard before voting on one of these plans for a company that may well be in Charter 11 with out a white knight to buy them out. The shareholder may end up with nothing.
