Zoetis (ZTS) Adopts 'Poison Pill' Provision

November 17, 2014 6:41 AM EST

Zoetis (NYSE: ZTS) announced that its Board of Directors has adopted a one-year shareholder rights plan (the “Plan”) and declared a dividend distribution of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock. The Plan will automatically expire on November 16, 2015, unless the Rights are earlier redeemed, exchanged or terminated.

The Plan is intended to protect shareholders and the Company from any attempt to take control of the Company that the Board of Directors determines is not in the best interest of shareholders and does not reflect the Company’s unique industry position and long term value. It is also designed to provide the Board sufficient time to make fully informed decisions in response to any open market or other accumulation of shares.

The Plan is not intended to prevent an offer to acquire the Company or any other business combination the Board may approve and, as such, may be amended, redeemed or terminated by the Board at any time prior to being triggered.

Under the Plan, the Company is issuing one Right for each current share of common stock outstanding at the close of business on November 24, 2014. If the Rights become exercisable, each holder of a Right will be entitled to buy one one-thousandth of a share of preferred stock at an exercise price of $200, subject to adjustment as provided in the Plan. The Rights are not taxable to shareholders. Shareholders are not required to take any action to receive the Rights.

The Rights will be exercisable only if a person or group (an “Acquiring Person”) acquires 15% or more of Zoetis common stock. If a shareholder’s beneficial ownership of Zoetis common stock as of the time of this announcement of the Plan and associated dividend declaration is at or above 15% (including through entry into certain derivative positions), the Rights would become exercisable if at any time the shareholder increases its ownership percentage by .001% or more. In those situations, each holder of a Right (other than an Acquiring Person, whose Rights will become void and will not be exercisable) will be entitled to purchase a number of shares of Zoetis’ common stock for $200 that have a market value of twice the exercise price of the Right.

At any time prior to 10 business days following a public announcement that a person has become an Acquiring Person, the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right. Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the $0.001 redemption price.

Details of the Plan will be communicated in a Form 8-K to be filed with the U.S. Securities and Exchange Commission.

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