Navistar Adopts 'Poison Pill' Provision to Deter Takeover
Measure Would Allow Investors to Buy Shares at Discount
Just a week after Volkswagen's reported interest in American heavy truck and engine maker Navistar, comes word that the company has adopted a so-called "poison pill" provision that would deter an outright takeover from an outside investor by allowing the company to issue new stock shares at a heavily-discounted price, according to a Reuters report.
The move reportedly came after a disclosure by hedge fund MHR Fund Management LLC that the fund owned 13.6 percent of the company's outstanding shares, surpassing the 11.9 percent stake of billionaire investor Carl Icahn.
According to the provision, Navistar would offer current shareholders the right to purchase a new series of shares at a 50 percent discount if any investor declares a 15 percent share or makes a tender offer that would give the investor that big of a steak. Naturally, the investor or investors in question would not be eligible.
No outside companies have made an official offer to take over Navistar, although, as noted, there has been speculation Volkswagen is looking to expand its U.S. commercial market presence. Fiat Industrial, the commercial-vehicle division of Fiat, is said to have the same designs. Navistar shares have dropped 45 percent in the past year, making the truckmaker an attractive takeover target.