Aceto Corp. enacts 'poison pill' shareholder rights plan
Aceto Corp. headquarters in Port Washington, Oct. 21, 2011. Credit: Barry Sloan
Drug and chemical maker Aceto Corp. has moved to shield potential future tax benefits by adopting a shareholder rights plan, or "poison pill," to deter some potential acquirers.
The rights plan, which Aceto disclosed Monday, would go into effect if an acquirer bought more than 4.99 percent of the company's stock. The plan would let shareholders other than the acquirer buy additional shares at a "significant discount," thus diluting the acquirer's stake with the issuance of the additional stock. Such a plans is known on Wall Street as a "poison pill."
The company said the plan would shield potential future tax benefits on the company's books, which could be lost if the company were bought.
"Aceto's ability to utilize these tax assets during future periods would be substantially limited in the event of an 'ownership change,' " the company said.
The board of directors has the discretion to exempt certain acquirers.
The announcement said the rights plan "is not intended to be an anti-takeover measure or to deter offers that are fair and otherwise in the best interest of Aceto's shareholders."
The news release did not specify the value of the potential future tax benefits. The company said the rights plan would expire on Nov. 5, 2021 or on an earlier date under certain circumstances.
An Aceto spokeswoman did not respond to a request for comment.
Shares of Port Washington-based Aceto fell 4.6 percent Monday to close at $2.07. Twelve months ago shares were trading at $9.73.
The company posted a net loss of $316.1 million, or $8.98 per share, in the fiscal year that ended June 30.
In April, the 71-year-old maker of generic drugs announced it had hired an investment bank in connection with the possible sale of the company.
In July Alan Levin, a veteran drug industry executive who had served on the Aceto board since 2013, became the company's chairman.
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
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