Starz has adopted a limited-duration shareholder rights plan, commonly referred to as a “poison pill,” in an effort to reduce the likelihood that a person or group can gain control of the company’s shares without appropriately compensating shareholders for that control.
Under the terms of the plan, which is typically designed to defend against hostile takeovers, Starz will issue one right for each outstanding common share. For shares issued and outstanding as of March 20, the rights will be paid to shareholders through a dividend.
The rights will become exercisable if a person or group acquires 17.5% or more of Starz’s outstanding shares. Anyone who currently owns more than the triggering percentage will not be allowed to acquire additional shares. If the rights become exercisable, all holders of rights other than the person or group triggering the plan will be entitled to acquire common shares at a 50% discount to the then-current market price.
The plan, which takes effect immediately, will expire on March 10, 2027. It can also be extended to March 10, 2027 or terminate early.
“The Board determined to adopt the Rights Plan as they believe it is in the best interest of the Company and allows it to pursue its long-term strategic plan and maximize value for all shareholders,” Starz said in a statement. “The Rights Plan applies equally to all current and future shareholders. The Rights Plan is not intended to deter offers or preclude the Board from considering offers that are fair and otherwise in the best interest of the Company’s shareholders.”
A Starz spokesperson declined to say what prompted the adoption of the shareholders rights plan beyond deferring TheWrap to the company’s statement.
The move comes after former Treasury Secretary Steven Mnuchin’s Liberty Funds entered into an agreement last week to sell all shares owned by the firm in a private transaction for $25 million, which is expected to close no later than March 13.
The 1,803,786 shares of Starz were acquired by Allen Media Group founder Byron Allen at a purchase price of $13.86 per share. Prior to the deal, Allen did not beneficially own or exercise control over any shares of Starz. His firm Allen Family Capital acquired the shares for “investment purposes” and may increase or decrease its position depending on Starz’s performance and other market conditions.
Allen Family Capital noted that it may make additional purchases on the open market or in privately negotiated transactions, including directly with Starz. It could also decide to “hold or dispose of all or part of the investments in the Common Shares or other securities of Starz and/or enter into derivative transactions with institutional counterparties with respect to Starz’s securities, including the Common Shares.”
Additionally, Allen said that it may engage in communications, without limitation, with one or more shareholders of Starz or the company’s management and board of directors and “may make suggestions or proposals concerning Starz’s operations, prospects, business and financial strategies, strategic transactions, assets and liabilities, business and financing alternatives, the composition of the board of directors and such other matters as Allen may deem relevant to the investment in Starz.”
Shares of Starz closed up more than 3% at the end of Tuesday’s trading session at $15.43 apiece. The stock is up 26% in the past five days, 60% in the past month, 28% in the past six months and 32.9% year to date.
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