Afraid of a Hostile Take-Over? Get a Shareholder’s Rights Agreement!

Also known as a “poison pill”, a shareholder rights agreement can be a valuable anti-takeover device for a company that wnats to remain independent. Given that M&A activity is likely to go on an upswing as the economy slowly recovers, any company that sees itself as a likely takeover target that wants to remain independent should consider taking any steps it can to stay that way. As per this recent Industry Week article on how poison pills still ofer protection, especially if the poision pill triggers below the 5% IRS threshold.

It also summarizes a few suggestions from a new report from the Conference Board, titled Poison Pills in 2011, that recommends that board members absain from certain defensive tactics, such as introducing supermajority voting requirements or disallowing action by written consent or limiting the ability to call special meetings, because they could cause the ire of ISS and attract activist shareholders.