The decision by Netflix to adopt a stockholder rights plan...
The decision by Netflix to adopt a stockholder rights plan was “a very reasonable thing to do in light of the recent accumulation of shares and options by an activist investor,” spokesman Jonathan Friedland said Monday. The activist investor he…
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was clearly referring to, but declined to name, was Carl Icahn, who disclosed in an SEC filing last week that he and his affiliated companies bought about a combined 10 percent of Netflix. Icahn bought the shares with the belief that they were “undervalued due to the Issuer’s dominant market position and international growth prospects,” Icahn said in the filing. Icahn also believes Netflix “may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution” of the Internet, mobile and “traditional industry,” the filing said. The Netflix board adopted the stockholder rights plan, often called a “poison pill,” to “protect” the company and its stockholders from “efforts to obtain control” of Netflix that the board “determines are not in the best interests of Netflix and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Netflix,” it said in a news release Monday. Under the plan, Netflix is issuing one right for each current share of common stock outstanding at the close of business Nov. 2, it said. Initially, the rights won’t be exercisable and will trade with shares of Netflix common stock, but if the rights become exercisable, each right will entitle stockholders to buy one one-thousandth of a share of a new series of participating preferred stock at an exercise price of $350 per right, it said. The rights will be exercisable only if a person or group buys 10 percent (or 20 percent in the case of institutional investors filing on Schedule 13G) or more of Netflix common stock in a transaction not approved by the board, it said. If a person or group acquires the 10 or 20 percent or more of outstanding common stock, each right will entitle its holder to buy, at the right’s exercise price, a number of shares of Netflix common stock having a then-current market value of twice the exercise price, it said. The rights will expire Nov. 2, 2015, unless they have previously been redeemed by the board, it said.