Fred's Adopts Poison Pill After Activist Takes Big Stake
December 27 2016 - 8:28AM
Dow Jones News
By Austen Hufford
Pharmacy chain Fred's Inc. said Tuesday it has adopted a
so-called shareholder rights plan, less than a week after an
activist investor took a nearly 25% stake in the company.
Thursday, The Wall Street Journal reported that Alden Global
Capital had quietly amassed its stake in the company.
The poison pill, as shareholder-rights plans are often called,
could limit Alden's ability to add to its stake, as it would kick
in to potentially dilute the company's share count if an existing
large shareholder expanded its holdings or a new shareholder built
a 10% stake.
Alden didn't immediately respond to a request for comment.
Last week, Fred's shares rose sharply after Fred's said it would
more than double its size by purchasing 865 stores Rite Aid Corp.
needs to sell to close its merger with Walgreens Boots Alliance
Inc.
Fred's said Tuesday the plan reduces the likelihood for anyone
to "gain control of the company through open market accumulation
without appropriately compensating its shareholders for such
control or providing the board sufficient time to make informed
judgments."
Fred's also said it has "an ongoing dialogue with a number of
shareholders and always welcomes all constructive input," but said
it wouldn't comment on specific discussions with shareholders.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
December 27, 2016 08:13 ET (13:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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