Nutrition 21, the US company which specialises in developing and marketing nutritional products and in particular those based on chromium, has unveiled plans for a shareholder rights deal which is designed to help it stave off the prospect of unwarranted takeover bids.
"The rights plan is designed to deter coercive takeover tactics, including the accumulation of shares in the open market or through private transactions, and to prevent an acquirer from gaining control of the company without offering a fair price to all of the company's stockholders," Nutrition 21 said in a statement.
The company said that the plan would give each shareholder one preferred purchase right for each share they hold at close of business on 25 September 2002. Each right will entitle shareholders to buy one one-thousandth of a share of newly created preferred stock for $3.00 (€3.1), a unit equivalent to one share of the company's common stock.
The rights, which will expire on 11 September 2012, will be exercisable only if a person or group acquires beneficial ownership of 15 per cent or more of the company's common stock (or 30 per cent in the case of a person or group that is currently a 15 per cent holder) or begins tender or exchange offer which would result in them controlling 15 per cent or more of the company's shares.
Nutrition 21 has been advancing in leaps and bounds in recent months, and the company's management is clearly conscious of the fact that this makes it an interesting takeover target. The rights plan will allow the company's current shareholders to benefit from any eventual takeover, and might also force potential investors to think twice before undervaluing the company. Whether it will put off future bidders entirely is another matter, but Nutrition 21 is clearly confident that it can continue its own development without the need for additional investment - at least of the unsolicited sort.