Software maker Net Perceptions announced Friday that it has adopted a stockholder-rights plan to ward off a hostile takeover--the most recent technology company to seek "poison pill" protection from unwanted suitors.
The board of directors at the Minneapolis-based company, which develops software for e-commerce clients, is making it tougher for any individual or corporation to purchase a large chunk of outstanding shares. If any shareholder exceeds a 15 percent stake, stockholders may buy a fractional share of Net Perceptions' preferred stock for $15.
Such a price would be an enormous premium over the market value of the 5-year-old company. Net Perceptions closed Friday at $1.75, down 16 percent since the beginning of the year and down 91 percent from its 52-week high of $20.25.
Anyone who acquires 15 percent of the company can do so only with the consent of the stockholders after a vote. Unless the board votes to change the policy, it will stay in place until June 14, 2011.
Net Perceptions--whose clients include Best Buy, JC Penney and Kmart--is the latest high-tech company to attempt to ward off a takeover. With depressed stock prices and, in extreme cases, assets worth more than their market valuations, many technology companies are feeling vulnerable.
Corporate law firm Wilson Sonsini Goodrich & Rosati, headquartered in Palo Alto, Calif., has seen almost a doubling of its anti-takeover business since last year as companies scramble to draft anti-takeover clauses.
In a hostile takeover, a company is taken over by another company or a well-financed raider against the wishes of management and the board of directors. If the offer price is high enough, company shareholders may vote to accept the offer even if management resists and says the company is worth more.
A shareholder-rights plan known as a "poison pill" makes a takeover extremely expensive by triggering a flood of new stock to dilute any stake a hostile bidder may seek. A board of directors can implement a poison pill at any time and does not need shareholder approval.