8-KOther Events

CENTENE CORP 8-K Report (Aug 30, 2002)

Filed August 30, 2002For Securities:CNC

Summary

Centene Corporation (CNC) announced on August 30, 2002, the adoption of a shareholder rights plan, commonly known as a "poison pill." This plan, effective August 30, 2002, will issue one "Right" for each outstanding share of common stock. Each Right entitles its holder to purchase a fraction of a share of Series A Junior Participating Preferred Stock at a specified price if a triggering event occurs, such as an acquirer obtaining 15% or more beneficial ownership of the company's common stock without board approval. The primary purpose of this rights plan is to protect existing shareholders from coercive or unfair takeover tactics by giving the Board of Directors more time to evaluate unsolicited offers and to encourage any potential acquirer to negotiate with the Board. While the rights are not immediately exercisable and are attached to existing common stock, they will become exercisable under specific hostile takeover scenarios, potentially diluting the stake of an unwanted acquirer and providing leverage for the company to negotiate a better deal for all shareholders.

Key Highlights

  • 1Centene Corporation has implemented a shareholder rights plan (poison pill) effective August 30, 2002.
  • 2Each outstanding share of common stock will receive one "Right".
  • 3Rights become exercisable if an acquirer obtains beneficial ownership of 15% or more of the company's common stock without board approval.
  • 4Upon triggering, Rights holders can purchase Series A Junior Participating Preferred Stock at a discount, diluting the acquirer's stake.
  • 5The plan aims to deter coercive takeovers and provide the Board time to evaluate offers.
  • 6The Rights are redeemable by the company for $0.001 per Right under certain conditions prior to a triggering event.
  • 7The Rights expire on August 30, 2012, unless earlier redeemed or exercised.

Frequently Asked Questions

A shareholder rights plan, often called a 'poison pill,' is a defense tactic used by a company to prevent hostile takeovers. Centene has adopted this plan to protect its shareholders from coercive or unfair takeover offers and to give the Board of Directors sufficient time to evaluate any unsolicited offers and negotiate on behalf of all shareholders.

Each holder of Centene common stock will receive one Right. These Rights are initially attached to the common stock and are not separately tradable or exercisable. They become exercisable only if a person or group acquires 15% or more of Centene's common stock without the Board's approval. If triggered, each Right allows its holder to purchase a fraction of a share of Series A Junior Participating Preferred Stock at a steep discount, effectively making it more expensive for the acquirer to gain control.

The adoption of the rights plan itself does not immediately affect your current ownership of Centene's common stock, nor does it impact your right to receive dividends declared on the common stock. The Rights are not exercisable until a specific 'triggering event' occurs. Until then, they are simply attached to your existing shares and will transfer with them.

Yes, Centene's Board of Directors has the right to redeem the Rights in whole, but not in part, at any time before a 'triggering event' occurs. The redemption price is $0.001 per Right. This allows the company to dismantle the plan if it determines it's no longer necessary or if a mutually agreeable transaction is proposed.