Netflix Poison Pill

Netflix is facing a hostile takeover. The company said Monday it has adopted a “stockholder rights plan” designed to prevent activist shareholders from the attack.

The plan, known to investors as a “poison pill,” would kick in if an individual or group tried to buy a sizable chunk of the company without approval from Netflix’s board. If that happened, Netflix can now use a technical maneuver to flood the market with new shares and make a takeover prohibitively expensive.

Netflix’s rivals, which include Hulu and an upcoming Verizon-Redbox partnership, are charging into the super-hot streaming video space. Many of them are tech or media titans that have other revenue streams to finance their growth and content acquisition costs. Netflix, on the other hand, is dependent solely on its core product.

via CNN