Netflix Swallows Poison Pill to Stop Icahn Takeover

by Christopher Freeburn | November 5, 2012 12:26 pm

[1]Netflix (NASDAQ:NFLX[2]) is preparing for a possible onslaught from activist investor Carl Icahn[3].

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[4]. He said he considers Netflix to be undervalued. The billionaire investor has battled management at a number of companies, including Lions Gate (NYSE:LGF[5]), Navistar International (NYSE:NAV[6]) and Clorox (NYSE:CLX[7]).

Shares of Netflix rose fractionally in midday trading on Monday.

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