The shareholder rights plan has Cubic Corp. granting all shareholder one right for each outstanding share of CUB stock that they own. The adoption of the plan is limited and will last until Sept. 19 of next year.
Cubic Corp. adopted the shareholder rights plan in response to Elliott Management acquiring a stake of 15% in the company via direct ownership and derivatives position. The company has expressed its interest in acquiring Cubic Corp..
The problem here is that Cubic Corp. isn’t looking to be acquired. The company didn’t put itself up for sale. Also, its Board of Directors believes that its best for the company to remain under its own ownership.
The adoption of the rights plan gives Cubic Corp. time to look over any offers made by Elliott Management without having to worry about a hostile takeover. The plan triggers once an entity gains a 15% stake in the company, which Elliott Management has done.
David F. Melcher, lead independent director of Cubic Corp., said the following about the news.
“Cubic’s Board is committed to creating long-term value and ensuring that our shareholders are able to realize the full potential of their investment in the Company. The adoption of the Rights Plan is intended to provide the Board with time to make informed decisions and prevent any third party from obtaining control of Cubic in a manner and at a price that are not in the best interests of Cubic’s shareholders.”
CUB stock was up 34.8% as of Monday afternoon.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.