NEW YORK (AP) — Netflix is moving to protect itself against hostile takeovers, less than a week after activist investor Carl Icahn disclosed a stake of nearly 10 percent in the online video company.
Netflix Inc. said Monday that it has adopted a shareholder rights plan, also known as a poison pill. Such a plan is designed to make it difficult or even impossible for someone to take over the company without an agreement from the board. When the provision is triggered, additional shares flood the market and make it prohibitively expensive for a takeover.
Netflix said the provision is triggered if a person or group acquires 10 percent of Netflix, or 20 percent in the case of institutional investors, in a deal not approved by the board. The Los Gatos, Calif.-company said that its plan isn't intended to interfere with a board-approved transaction.
"Adopting a rights plan is a very reasonable thing to do in light of the recent accumulation of a lot of Netflix stock by an activist shareholder," spokesman Jonathan Friedland said.
Icahn disclosed last Wednesday that he spent some of his $14 billion fortune on his 10 percent stake. The documents he filed didn't disclose why Icahn and his investment funds have been buying 5.5 million Netflix shares since early September. But it's likely that he would press Netflix to make dramatic changes to boost its stock price.