Should Companies Play Strong Defense in These Hostile Times?

Extreme dislocation and a major sell-off in global equity markets have led to many public companies finding their stock prices at severely depressed levels, often over 50% off last twelve month highs. These markets may present opportunities for strategic or financial bidders, including campaigns from well-known activists.

Many companies prepare for the possibility of a hostile campaign by having a shareholder rights plan (often called a “poison pill”) on the shelf and ready for adoption if needed. As the coronavirus (COVID-19) pandemic continues to weigh on markets, our Client Alert considers whether the conventional playbook makes sense and how a Board in appropriate cases may think about adopting a rights plan customized to its situation before an actual threat emerges.