Netflix takes steps to thwart hostile takeover

SAN FRANCISCO — Netflix Inc., the world’s largest subscription video service, adopted a so-called poison pill to protect against a hostile takeover after billionaire investor Carl Icahn acquired an almost 10 percent stake in the company.

The stockholder rights plan, approved unanimously by Netflix’s board on Nov. 2, would be triggered if an “activist shareholder” acquired 10 percent of the stock, or an institutional investor bought 20 percent, Jonathan Friedland, a company spokesman, said in an interview.

The move is designed to make a hostile takeover too expensive and gives Netflix Chief Executive Officer Reed Hastings a tool to thwart Icahn or other potential buyers. Icahn, 76, said on Oct. 31 he had acquired stock and options representing 5.54 million Netflix shares. He said the video service is an attractive takeover target for larger companies, including Amazon.com and Verizon Communications, that have entered the market Netflix pioneered.

The shareholders’ rights plan is intended to protect Netflix and its stockholders from efforts to gain control that the board deems not in the best interests of the company, Netflix said in a statement today. It’s not meant to interfere with any merger approved by the board, Netflix said.

The measure will expire in three years unless Los Gatos, Calif.-based Netflix votes to extend it, according to Friedland.

The shares have whipsawed in the past two years, falling from a peak closing price of $298.73 in July 2011 to as low as $53.80 in September. The shares declined 12 percent on Oct. 24, the day after the company reported subscriber growth that disappointed investors also weighing its content and international expansion costs. The stock was up 11 percent this year before today.

Icahn spent $168.9 million to buy 1.25 million Netflix shares and 4.29 million options, according to his filing. The options expire in September 2014. Icahn didn’t immediately return a call seeking comment on the poison pill.

The investor last year ended a battle for control of Lions Gate Entertainment Corp. after failing to win board seats, and bid unsuccessfully for software maker Mentor Graphics Corp. He said he invested in Netflix because the company is undervalued, based on its market position and prospects for international expansion.

More in Herald Business Journal

Peoples, HomeStreet banks bump lowest salaries after tax cut

The banks with Snohomish County branches will raise minimum salaries for employees to $15 an hour.

Electroimpact cuts Mukilteo staff by 9 percent

“What we’re missing now is a monster anchor project,” the company’s VP said.

Exotic animals find compassionate care in Bothell (video)

At the Center for Bird and Exotic Animal Medicine, vets treat snakes, hedgehogs and even kangaroos.

How can you tell if you are getting good financial advice?

Assume that it’s still the same buyer-beware market that has always existed.

Amanda Strong (left) tries on an Angel of the Winds Arena hat as she and Courtney Brown hand out gift bags after the renaming ceremony Dec. 13 in Everett. The new name replaces the Xfinity name. (Andy Bronson / Her file)
Angel of the Winds to break ground on $60M casino expansion

“We think we’re on the cusp of becoming a major resort.”

In this Dec. 20, 2017, photo, a clerk reaches to a shelf to pick an item for a customer order at the Amazon Prime warehouse, in New York. (AP Photo/Mark Lennihan, File)
Amazon’s potential HQ2 sites leaves many cities disappointed

And yet, some municipal leaders are looking at the bright side of being rejected.

How do you retrieve an errant Boeing 737 from a muddy slope?

Turkish authorities used cranes to lift a plane that skidded off a runway.

Don’t take economic forecasts to the bank — or the casino

Air travel delays could spur a rebirth of passenger rail service.

Emirates orders 20 more Airbus A380 jumbos, saving program

The Dubai carrier also has options to buy 16 more. The program seems safe until 2029.

Most Read