Netflix said last week it could work with Carl Icahn but now managers gird for battle.
Netflix CEO Reed Hastings
(Credit: CBS 60 Minutes)
The Web video-rental service said today that it is preparing what is commonly referred to as a poison pill, in an effort to fend off attempts from outside companies from making a hostile bid to takeover Netflix. The statement below does not name investor Carl Icahn, but after the billionaire investor and former corporate raider acquired 10 percent of Netflix's shares last week, it's obvious he is the motivation for this action.
The Netflix board of directors approved the plan on November 2, the company said in a statement. Netflix shares were flat in early morning trading.
A shareholder rights plan, also known as a poison pill, is a type of defensive tactic used by a corporation's board of directors against a takeover. It was widely used during the 1980s when guys like Icahn made fortunes from hostile takeovers. The plan is designed to make it prohibitively expensive to acquire a significant amount of shares and discourage those seeking a takeover from buying shares on the open market.
The plan would kick in if an individual investor accumulated 10 percent of the company's shares or if an institutional investor acquired 20 percent, Netflix said.
Below is part of the statement Netflix just released:
Netflix ... [Read more]
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