Summary
Fair, Isaac and Company, Incorporated (now known as FICO) announced on August 7, 2001, the declaration of a dividend distribution of one "Right" for each outstanding share of common stock. These Rights are designed as a "poison pill" defense mechanism. They will become exercisable if a person or group acquires 15% or more of the company's common stock without Board approval, or if a tender offer leading to such ownership commences. Upon exercise, a Right holder can purchase a fraction of a new Series A Participating Preferred Stock at a specified price, which can dilute the acquirer's stake.
Key Highlights
- 1Fair Isaac declared a dividend distribution of one "Right" per outstanding share of common stock on August 7, 2001.
- 2The Rights become exercisable if an "Acquiring Person" obtains beneficial ownership of 15% or more of the common stock.
- 3Upon exercise, Rights holders can purchase 1/1000th of a share of Series A Participating Preferred Stock for $240.00.
- 4This is a standard "poison pill" anti-takeover defense mechanism.
- 5The Rights will expire on August 9, 2011, unless redeemed or exchanged earlier by the company.
- 6The company can redeem the Rights for $0.001 per Right before an Acquiring Person emerges.
- 7The Series A Preferred Stock carries significant preferential dividends, voting rights, and liquidation preferences, designed to be dilutive to an acquirer.
Frequently Asked Questions
The primary purpose of these "Rights" is to serve as an anti-takeover defense mechanism, commonly known as a "poison pill." They are designed to make a hostile takeover of Fair Isaac prohibitively expensive and dilutive for an unwanted acquirer by allowing existing shareholders (excluding the acquirer) to purchase additional stock at a discount.
The Rights will become exercisable upon the occurrence of a "Distribution Date." This date is triggered by the earliest of: (i) a public announcement that an "Acquiring Person" has acquired 15% or more of the company's outstanding common stock (with certain exceptions), or (ii) 10 business days after a tender offer begins that would result in a person becoming an Acquiring Person (unless extended by the Board).
If an Acquiring Person emerges, holders of Rights (other than the Acquiring Person) will be able to exercise their Rights. Each Right will allow the holder to purchase 1/1000th of a share of Series A Participating Preferred Stock for $240.00. This effectively allows other shareholders to acquire a stake in the company at a price that would significantly dilute the ownership percentage and control of the Acquiring Person.
Yes, the company's Board of Directors can redeem all of the outstanding Rights for a nominal price of $0.001 per Right at any time before a person becomes an Acquiring Person. After an Acquiring Person emerges, the Board may also have the option to redeem or exchange the Rights under specific circumstances.