Holders Get a Say in Poison Pills

Two well-known companies that have an edge in relationships with some stockholders installed poison pills by borrowing the recess appointment strategy in government. Directors at CKE Restaurants Inc. and Bally Total Fitness Inc. voted in shareholder rights plans on a temporary basis and left their ultimate fate up to votes at the next scheduled stockholder meetings. The stockholders could ratify the directors’ actions – a requirement at all Canadian companies installing pills – or reject the defensive weapons. With a recess appointment, a president can name someone to an executive post on an acting basis while Congress is not in session but full-time status depends on U.S. Senate confirmation. Image Entertainment Inc. added a shareholder rights plan after turning down an offer from Lions Gate Entertainment Inc., and Cygnus Inc. adopted a pill to ensure that it wouldn’t lose its net operating loss (NOL) tax credits through an unwanted change in control. Other companies that installed pills in October were ATP Oil & Gas Corp. and Align Technology Inc. (c) 2005 Mergers and Acquisitions Journal and SourceMedia, Inc. All Rights Reserved. http://www.majournal.com http://www.sourcemedia.com