Replies to post #173151 on InterDigital Inc (IDCC)

[xdx]

Pochemunyet: Thanks to a prior post by Old Dog, here is how it applied previous to this recent update. If you do a search (bottom of page), you can see all that has been posted about Poison Pills associated with IDCC. Do an advance search, public messages, type in IDCC poison pill and you'll go back to its inception. Here's OD's info brought to this board:
12. SHAREHOLDER RIGHTS PLAN

In December 1996, our Board of Directors declared a distribution under its Shareholder Rights Plan (Rights Plan) of one Right (as described below) for each outstanding common share of the Company to shareholders of record as of the close of business on January 3, 1997. In addition, any new common shares issued after January 3, 1997 will receive one Right for each common share. The Rights Plan was amended in a number of respects with the latest amendment in March 2000. As amended, each Right entitles shareholders to buy one-thousandth of a share of Series B Junior Participating Preferred Stock at a purchase price of $250 per share, subject to adjustment. Ordinarily, the Rights will not be exercisable until 10 business days after any of the following events (each, a Triggering Event): (i) a non-exempt person or group owns or acquires 10% or more of the Company’s outstanding Common Stock, or (ii) a non-exempt person or group publicly commences an offer for 10% or more of the Company’s outstanding Common Stock, or (iii) a non-exempt person or group publicly announces an intention to acquire control over the Company and proposes in a proxy or consent solicitation to elect such a number of directors, who if elected, would represent a majority of the directors when compared with the Independent Directors (as defined in the Rights Plan) on the Board. If the Company’s Board of Directors has consented to the occurrence of a particular Triggering Event, then the occurrence of such Triggering Event will not give rise to the exercisability of the Rights. In general, upon the occurrence of a Triggering Event without Board approval, each holder of a Right will have the right to receive, upon exercise, Units of Preferred Stock (or, in certain circumstances, Company Common Stock, cash, property, or other securities of the Company) having a value equal to twice the exercise price of the Right, or if the Company is acquired in a merger or other business combination, each holder of a Right will have the right to receive stock of the acquiring person with a value equal to twice the exercise price of the Right.

[GrnAcrs]

pochemunyet, re poison pills...three general explanations follow:

1) http://www.answers.com/topic/poison-pill

poison pill n. Informal.

A plan or tactic intended to make a hostile corporate takeover prohibitively expensive, as one in which a company's stockholders are offered shares of stock at a bargain price in the event that a single suitor acquires a high percentage of the stock.

2)http://en.wikipedia.org/wiki/Poison_pill

Shareholder Rights Plans

The target company issues rights to existing shareholders to acquire a large number of new securities, usually common stock or preferred stock. These new rights usually allow holders (other than an acquirer) to convert the right into a large number of common shares if anyone acquires more than a set amount of the target's stock (typically 10-20%). This immediately dilutes the percentage of the target owned by the acquirer, and makes it more expensive to acquire control of the target. This form of poison pill is sometimes called a shareholder rights plan because it is intended to give management (and possibly shareholders) the right to approve an acquisition, potentially requiring the acquirer to pay a premium for control of the target. Because the board of directors of the company can redeem or otherwise eliminate a standard poison pill, it does not typically block or impede a proxy fight or other takeover not accompanied by an acquisition of a significant block of the company's stock.

3) http://www.teenanalyst.com/advanced/poisonpill.html

When I was young, I didn't always get along with my sister and there were times when I'd have something that she wanted but I didn't want to share. In order to win the fight and get things MY way, I'd try to do something to it so that she would no longer want it. I would never have thought that this same thing is often practiced in the business world...

When a company wants to buy out another public company they have to make an offer and the shareholders usually give their approval. Every once in a while, a company doesn't want to be bought out and that's when things turn hostile (hence the name "hostile takeover").

Usually when a company doesn't want to be taken over, it's because they feel that the offer is inadequate and they think that shareholders would be better served if the company wasn't bought out. In order to prevent the hostile takeover from happening, the company can adopt a "poison pill" plan.

The poison pill is meant to make the company so expensive and unattractive that the potential buyer would no longer be interested. The company can do this in a number of ways. One common way is to issue lots of shares of stock so that it's harder for buyer to acquire a majority of the shares. Some companies also begin issuing preferred stock to the shareholders to give them more power in the event of a takeover. Another way that companies discourage takeovers is by taking on a heap of new debt.

Poison pills are usually only used to serve the shareholders' best interest by protecting them from being bought out at a low price. If the company feels that the shareholders are best served by being acquired by the new company, then the company usually agrees to the offer. So if you hear about "poison pills" in the news, you'll know what they're talking about.