Southwest Airlines (NYSE:LUV) is in the news Wednesday after the airline company adopted a poison pill plan.
Let’s go over everything investors need to know about this poison pill plan below!
- This comes after activist investor Elliott Management acquired an 11% stake in LUV stock.
- With this poison pull plan, Southwest Airlines can keep the activist from acquiring a larger stake in the company’s shares.
- This will trigger if any investor tries to acquire more than a 12.5% stake in LUV stock.
- When that happens, shareholders with a stake less than that are allowed to buy extra shares at a 50% discount.
- The point of this poison pill strategy is to keep Elliott from gaining too much influence over Southwest Airlines.
- The discount will let investors dilute stakes by buying more of LUV stock.
- This shows that Southwest Airlines is dedicated to fighting off Elliott Management.
Southwest Airlines Poison Pill: More Details
Southwest Airlines chairman Gary Kelly, who Elliott is trying to oust alongside CEO Bob Jordan, said this to CNBC after adopting the poison pill strategy:
“Southwest Airlines has made a good faith effort to engage constructively with Elliott Investment Management since its initial investment and remains open to any ideas for lasting value creation.”
LUV stock is up 1.4% as of Wednesday afternoon. This comes with 4.2 million shares traded, as compared to a daily average of about 9.8 million shares.
Investors who are seeking out even more of the most recent stock market stories are going to want to stick around!
We have all of the hottest stock market news traders need to know about on Wednesday! Among that is what’s going on with shares of DouYu (NASDAQ:DOYU), Rivian (NASDAQ:RIVN) and CureVac (NASDAQ:CVAC) shares today. All of this news is ready to go at the links below!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
