(By Balachander) Netflix Inc. (NASDAQ: NFLX) shares retreated as much as 6.3 percent amid rumors that billionaire investor Carl Icahn could be selling his stake in the online video-rental service company.
The stock, which has been trading between $52.81 and $197.62 over the past year, traded 5.74 percent lower at $178.50 at 1.58 pm ET on Monday.
In November 2012, Netflix adopted a stockholder rights plan - a strategy used by companies to thwart hostile takeovers - just days after the activist investor disclosed a 10 percent stake in the streaming video company. The rights will expire on November 2, 2015.
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"Carl Icahn became a 10 percent investor last quarter at approximately $58 per share. We have no further news about his intentions, but have had constructive conversations with him about building a more valuable company," the company said in its 8K filing.
Activist investors such as Icahn acquires significant stakes in target companies, and seeks board change, divestiture or spin-off of operations to enhance shareholder value.
The rights plan - a so-called poison pill plan - is intended to protect Netflix and its stockholders from efforts to obtain control of Netflix that the Board determines are not in the best interests of Netflix and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Netflix, the company said.
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Netflix said the rights plan is not intended to interfere with any merger, tender or exchange offer or other business combination approved by the Board.
Under the plan, Netflix is issuing one right for each current share of common stock outstanding at the close of business on November 2, 2012. Initially, these rights will not be exercisable and will trade with the shares of Netflix's common stock.