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Hologic Announced Stockholder Rights Plan

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Hologic Announced Stockholder Rights Plan

Hologic (NASDAQ: HOLX) announced on Thursday that their Board of Directors unanimously adopted a one-year stockholder rights plan (the Rights Plan) following Carl Icahn's announcement that he intends to acquire an approximate 13 percent stake in the company.

In the press release, the Rights Plan is said to be "intended to ensure that the Board remains in the best position to perform its fiduciary duties and to enable all Hologic stockholders to receive fair and equal treatment. It is also designed to allow all Hologic stockholders to realize the long-term value of their investment by reducing the likelihood that any person or group would gain control of Hologic through open market accumulation or other coercive tactics without appropriately compensating the Company's stockholders for such control or providing the Board sufficient time to make informed judgments."

Under the Plan, stockholders of the company at the close of business on December 2, 2013 will receive one right for each share of stock. Each right will entitle stockholders to purchase one ten-thousandth of a share of a new series of stock for an exercise price of $107 per right, if someone attempts to acquire at least 10 percent of Hologic's common stock.

The board noted that this plan should preserve Hologic's ability to implement initiatives and create long-term value. The plan expires November 20, 2014.

In a note published today, RBC Capital Markets analyst Glenn Novarro commented, “We expect investors to react very favorably to activist involvement in HOLX shares, as the management team has been often criticized for destroying shareholder value through overpaying for large, transformative acquisitions such as Cytyc in 2007 and, to a lesser extent, Gen-Probe in 2012.”

Vijay Kumar, an ISI Group analyst, commented in a phone interview, "I don't even see what's the point of having this now." Kumar noted that the management team “has lost street credibility” and will likely be replaced following the board meeting on March 5.

Hologic closed at $22.28 on Wednesday and is currently trading +2.67 percent.

 

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Posted-In: Glenn Novarro ISI Group RBC Capital Markets Vijay KumarAnalyst Color News Best of Benzinga

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