RE: Ford Poison PillFord Adopts Plan To Preserve $19 Billion In Tax Benefits
DOW JONES NEWSWIRES Ford Motor Co. (F) announced Friday it has adopted a plan to preserve a potential $19 billion of tax benefits it could use to reduce future federal income taxes.
A number of companies, in particular builders, have done similar things in recent months to prevent the potential loss of the tax offsets. But they only can be used for a certain period, and some habitually unprofitable companies have had to write down their deferred tax assets.
The plans are akin to poison pills, which are intended to make hostile takeovers prohibitively expensive by issue a flood of new stock to current holders if a shareholder build a stake of a certain size.
Under Internal Revenue Service Section 382, a change could be triggered if shareholders who are determined to own 5% or more of a company's stock increase their collective ownership by more than 50% over a three-year period. Typically excluded are institutional investors like mutual funds.
Any Ford holders who already have a stake of at least 5% won't be deemed a so-called acquiring person unless they increase their current stake of the auto maker by at least 0.5 percentage point.
Ford shares are activity trading as the stock's value has fallen in recent years. Shares were recently up nearly 1% at $7.50 and have more than tripled this year as Ford sales have held up better than rivals, even increasing in the U.S. the past two months.