US video streaming company Netflix has taken steps to head off any possible takeover that its board deems not to be in its best interests, by adopting a stockholder rights plan that would bar the purchase of newly-issued shares to certain parties.
The move appears to be a direct response to news reported last week that billionaire investor Carl Icahn has purchased a 10% stake in the company, commenting at the time that he believed Netflix stock to be “undervalued”.
Under the new rights plan, any individual who acquires 10% (or 20% in the case of institutional investors) or more of Netflix’s common stock will be prevented from buying any newly-issued stock in the event of a subsequent merger or takeover of the company.
This newly-issued stock is being allocated on the basis of one right for each outstanding share of Netflix common stock, and only becomes exercisable under the above conditions, if a transaction is not approved by the board of directors.
Netflix has now passed 30mn subscribers for its video streaming services in the US, Canada, Latin America, the UK, Ireland and the Nordic countries.
Rumours emerged last week that Microsoft may be considering its own bid to take control of the company, following reports that Netflix CEO Reed Hastings has left the Microsoft board to concentrate on other interests.