Netflix moves to stop hostile takeover
NEW YORK — Netflix is moving to protect itself against hostile takeovers, less than a week after activist investor Carl Icahn disclosed that he has accumulated a stake of nearly 10 percent in the online video company.
Netflix Inc. said Monday that it has adopted a shareholder rights plan, known as a poison pill. Such a plan is designed to make it difficult or even impossible for someone to take over the company without an agreement from the board. When the provision is triggered, additional shares flood the market and make it prohibitively expensive for a takeover.
Netflix said the provision is triggered if a person or group acquires 10 percent of Netflix, or 20 percent in the case of institutional investors, in a deal not approved by the board. The Los Gatos, Calif.-company said that its plan isn't intended to interfere with a board-approved transaction.
“Adopting a rights plan is a very reasonable thing to do in light of the recent accumulation of a lot of Netflix stock by an activist shareholder,” spokesman Jonathan Friedland said.
Icahn disclosed last Wednesday that he spent some of his $14 billion on a 10 percent stake. The documents he filed didn't disclose why Icahn and his investment funds have been buying 5.5 million Netflix shares since early September. But it's likely that he would press Netflix to make dramatic changes to boost its stock price.
The company has been stumbling since it raised its U.S. prices by as much as 60 percent last year. That triggered a backlash that resulted in the loss of hundreds of thousands customers and raised concerns on Wall Street that CEO Reed Hastings would have trouble paying for an ambitious plan to expand the company's service into dozens of other countries.
There is some cause for worry. Netflix's earnings through the first nine months of this year have fallen by 95 percent from last year.
The company also issued a fourth-quarter forecast that indicated the company might end up with a loss for the full year. This would be Netflix's first annual loss in a decade.
The rights plan expires on Nov. 2, 2015. In a regulatory filing Monday, Icahn called the adoption of a poison pill without a shareholder vote “an example of poor corporate governance.”
Netflix shares fell 35 cents to $76.55 in midday trading. The stock has traded in the 52-week range of $52.81 to $133.43.
The stock peaked at close to $305 nearly 16 months ago.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Torn thumb ligament puts Pirates’ Harrison on DL
- Pirates notebook: Four players selected for All-Star Game
- Two rookies among National League reserves for All-Star Game
- Wild Walk gives treetop view of New York forest
- Murrysville earns top seed in District 31 Legion tournament
- Accident closes Route 22 in Murrysville
- McCandless mom suspected of drowning sons found competent to stand trial
- New Horizons flyby of Pluto on track despite computer glitch
- Maryland mother charged with leaving baby on roadside
- Idaho wildfire destroys homes, prompts hundreds to evacuate
- Half a million faithful attend pope’s Ecuadoran Mass