Netflix (NASDAQ:NFLX) is preparing for a possible onslaught from activist investor Carl Icahn.
The DVD rental and video-streaming provider announced on Monday that its board had approved a new stockholders’ rights plan aimed at stopping a takeover bid, the Los Angeles Times noted.
Under its new defense, often called a “poison pill,” Netflix could issue a large number of new shares if a particular investor or group of investors attempted to gain control of a major stake in the company without the board’s OK.
Netflix will issue a dividend of one right per common share that could be activated in the event of a hostile bid, and it will keep the plan in effect for three years.
Last week, Icahn revealed that he now controls 10% of Netflix shares. He said he considers Netflix to be undervalued. The billionaire investor has battled management at a number of companies, including Lions Gate (NYSE:LGF), Navistar International (NYSE:NAV) and Clorox (NYSE:CLX).
Shares of Netflix rose fractionally in midday trading on Monday.