Disadvantages of Shareholder Rights Plan A news release that means NOTHING, imo.
WHY? Because in Canada Share holders rights are almost always overturned by the regulators. But first....
There are major disadvantages to poison pills:
1. Institutional investors are discouraged from buying into corporations that have aggressive defenses.
2. Ineffective managers can stay in place through poison pills; otherwise, outside venture capitalists might be able to buy the firm and improve its value with a better managing staff.
There is also this -
1. In Canada, almost all shareholders rights plans are "chewable," meaning they contain a permitted bid concept such that a bidder who is willing to conform to the requirements of a permitted bid can acquire the company by take-over bid without triggering a flip-in event.
2. Shareholder rights plans in Canada are also weakened by the ability of a hostile acquirer to petition the provincial securities regulators to have the company's pill overturned. Generally, the courts will overturn the pill to allow shareholders to decide whether they want to tender to a bid for the company. However, the company may be allowed to maintain it for long enough to run an auction to see if a white knight can be found.
This news is nothing but, imo, a piece of puffery.
ttfn
nopoo