Eastman Kodak Company announced today that it has enacted a Net Operating Loss Shareholder Rights Agreement which will serve to put a barrier to anybody trying to acquire the company.
Under the terms of the plan, should any investor attempt to buy five or more percent of the company over the next three years (or current investors with five percent attempt to buy more shares), Kodak would issue all current shareholders shares of preferred stock, driving up the cost of the acquisition. In finance, this is known as a “poison pill.” This defensive tactic became popularized in the 1980s. In recent years, most companies which have enacted poison pill plans have eventually accepted takeover bids.
The move is seen to be an attempt to block any party who wants to circumvent bidding on Kodak’s digital patents, and buy the company outright at under the value of the patents’ worth. Kodak announced on July 20 it was investigating possibilities with its digital patents.
Kodak’s stock finished trading on Monday at US$2.34 a share, down from nearly $4 a share from a year ago. The company currently has a market capitalization of US$630 million, well under the value of its patents alone. Kodak currently has 18,800 employees.