Rights Agreement

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Rights Agreement (aka "Poison Pill")

An anti-takeover arrangement often established by a company in anticipation of a hostile takeover attempt. The company appoints a Rights Agent who will issue Rights Certificates to each shareholder at the time of the takeover attempt. The shareholder may then exercise these rights to receive additional shares of stock and/or debentures, making the target company more expensive to acquire as a result of the additional shares outstanding, or the additional debt.

Poison Pill

An antitakeover measure stipulating that shareholders on the receiving end of a hostile takeover may buy shares in their own company at a price below fair market value. Once the acquisition is complete, the provision allows these same shareholders to buy more shares in the new company for below market value. This forces shareholders in the acquiring company to suffer a devaluation and dilution of their own shares. This is done to discourage hostile takeovers among the shareholders of the acquiring companies. It is important to note that a poison pill need not use both of these tactics; sometimes it utilizes only one or the other.
References in periodicals archive ?
decreases the purchase price payable by holders of rights issued under the Rights Agreement upon exercise of such rights from $153.
Further details of the Rights Agreement are included in a Current Report on Form 8-K to be filed by the Company with the Securities and Exchange Commission.
This Rights Agreement was designed to ensure that all its shareholders receive fair and equal treatment in the event that an unsolicited attempt is made to acquire the company outside of the process led by a special committee of independent directors,
Among other benefits, the Rights Agreement enables the Company to continue to conduct an orderly, thorough and deliberative process of reviewing the Company's strategic alternatives and is designed to reduce the likelihood that any person or group would accumulate 15 percent or more of the stock or engage in other coercive takeover tactics without paying a control premium to all stockholders.
Under Section 23 of this rights agreement, the company will redeem all, and not less than all, of the outstanding rights at a redemption price of USD0.
The rights agreement was not adopted in response to any proposal to acquire control of the company.
OTCQX: GGOX), a leading fabless supplier of semiconductor and optical components that enable high speed information streaming, today announced that its board of directors has adopted a Rights Agreement (the "Rights Agreement") under which stockholders will receive rights to purchase shares of a new series of preferred stock.
M2 EQUITYBITES-April 3, 2015-Jamba terminates stockholder rights agreement
NYSE: FO), today announced that its board of directors adopted a Stockholder Rights Agreement in advance of the company's anticipated spin-off on October 3, 2011.
M2 EQUITYBITES-March 27, 2014-Alnylam Pharmaceuticals to issue 344,448 unregistered common shares to Genzyme under an investor rights agreement
PLANO, Texas -- Interphase Corporation (NASDAQ: INPH) (the "Company"), a leading global provider of solutions for converged communications networks, today reported that its Board of Directors has adopted a Shareholder Rights Agreement.
Eastman Kodak Company (NYSE: EK) today announced that its Board of Directors has adopted a Net Operating Loss (NOL) Shareholder Rights Agreement designed to preserve its substantial tax assets.