Netflix shareholder rights plan, which could scupper any takeover bid, comes as activist investor snaps up 10% stake
Netflix, the online video company, has inserted a poison pill into its share structure less than a week after activist investor Carl Icahn disclosed a stake of nearly 10%.
The shareholder rights plan is designed to make it difficult, or even impossible, for someone to take over the company without an agreement from the board. When the provision is triggered, additional shares flood the market and make it prohibitively expensive for a takeover.
Netflix, which has more than 1 million subscribers in the UK, said the provision would be triggered if a person or group acquires 10% of the company, or 20% in the case of institutional investors, in a deal not approved by the board.
“Adopting a rights plan is a very reasonable thing to do in light of the recent accumulation of a lot of Netflix stock by an activist shareholder,” its spokesman Jonathan Friedland said on Monday.
Icahn disclosed last Wednesday that he spent some of his $14bn fortune on his 10% stake. The documents he filed did not disclose why Icahn and his investment funds have been buying 5.5m Netflix shares since early September. But it is likely that he would press Netflix to make dramatic changes to boost its stock price.
The company has been stumbling since it raised its US prices by up to 60% last year. The move triggered a backlash that resulted in the loss of hundreds of thousands customers and raised concerns on Wall Street that its chief executive and co-founder, Reed Hastings, would have trouble paying for an ambitious plan to expand the company’s service into dozens of other countries.
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