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Activist fund Starboard asks Mercury Systems to scrap shareholder rights plan -Breaking

by Mike Robinson

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© Reuters.

(Reuters] – Starboard Value LP, an activist fund that invests in hedge funds, wrote a open letter Thursday asking Mercury Systems (NASDAQ;) to repeal the shareholders rights program it adopted.

Popularly called a “poison pills”, a shareholder rights plan is a defense strategy designed to prevent hostile takeovers. The plan allows investors who already have shares to buy more at a reduced price, and is typically activated by a party buying a particular percentage of a company.

Starboard controls approximately 7.33% Mercury. Starboard has requested that Mercury raise its ownership threshold to trigger the rights plan from 7.5% to 15%, in order to fully eliminate the rights plan.

Starboard wrote that “we believe the rights program is not in our best interests as shareholders.”

Mercury has not yet responded to a Reuters request.

Mercury Systems, Inc. had approved a shareholder rights agreement with a duration of one year on Dec. 28.

Jana Partners, an activist investor, stated last month that Mercury would be forced to look at other options, including selling.

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