Beleaguered database supplier Informix has toughened up its poison pill options in a bid to protect itself from a hostile takeover bid.
The company has had various precautions against takeover in place since the early 1990s, but on 3 September it filed a beefed-up option with the US Securities and Exchange Commission. This takes the form of a rights plan, which will kick in if any acquisitor purchases more than 20 per cent of outstanding stock in the company.
If the board of directors views a buyer as making a fair offer, then they can buy back the rights for a penny a share. But if it is regarded as a hostile or unwelcome takeover, then the acquirer would have to pay $60 a share, making it a less attractive buy. The current share price is around $9.
According to the SEC filing, the plan is "designed to protect and maximise the value of outstanding equity interests in the company in the event of an unsolicited attempt by an acquiror to take over the company in a manner or on terms not approved by the board of directors."
The company particularly wishes to deter a bit-by-bit takeover with a predator quietly acquiring small pockets of shares until it has secured enough to mount a frontal assault. "These tactics unfairly pressure stockholders, squeeze them out of their investment without giving them any real choice and deprive them of the full value of their shares," argues the Informix document.
But it emphasises that the plan is not intended to prevent a takeover on terms given the nod by the company's management. "The rights should not interfere with any merger or business combination approved by the board of directors," confirms the filing. Informix has been plagued by takeover rumours since it crashed from its number two slot in the relational database market amid massive losses earlier this year. Last month the company reported losses of $120.5 million on revenues of $164.7 million, considerably worse than Wall Street expectations. The company is also without a chief financial officer.
The beefed-up poison pill option is believed to be part of a wider initiative by recently appointed chief executive Bob Finnocchio to clean up Informix' books. The company has admitted that it will have to restate its 1996 results - which were profitable - following the discovery of reporting irregularities in its accounting and revenue recognition practices. The clean-up is likely to result in a loss for 1996.
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