Rights Agreement

Also found in: Dictionary, Thesaurus, Legal.

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 ?
Dave Cerotzke, Energy West Chief Executive Officer, stated, "Today's actions implement our previously-announced decision to terminate our rights agreement, and reflect our Board's intention to avoid corporate structural defenses while allowing our stockholders to have the final say on major decisions involving management and control of the company.
Securities and Exchange Commission on Tuesday, November 13, 2007 setting forth additional information regarding the terms and conditions of the Rights Agreement, the Rights and the preferred stock.
The Board believes that a Rights Agreement assists the Board in fulfilling its fiduciary duties to the Company and its shareholders.
Once the supplemental indenture and amendment to the Registration Rights Agreement become operative, they will be binding upon all holders of the Notes, including those holders who did not consent to the Proposed Amendments.
com, an update relating to the entry into the registration rights agreement and other recent events involving the company.
The Amended and Restated Rights Agreement will be filed with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K.
A copy of the amendment to the Company's rights agreement is to be filed with the Securities and Exchange Commission on May 5, 2005.
The offer from BMCA, which has repeatedly outbid The Carlyle Group, is contingent on ElkCorp waiving its shareholder rights agreement (poison pill), which absent such a waiver, would prevent BMCA from accepting shares that might be tendered.
00 principal amount of the Notes, payable to holders who validly tender their Notes and provide their consents to the proposed amendments to the indenture governing the Notes and to the termination of the registration rights agreement relating to the Notes prior to the Consent Payment Deadline.
In connection with the expiration of the Rights Agreement and related Rights, the Company is taking steps to voluntarily de-register the Rights under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and to delist the Rights from the New York Stock Exchange.
NASDAQ: WBMD) said that it recently amended the company's Rights Agreement.