Amusement park company Six Flags Entertainment has approved the adoption of a defensive one-year stockholder rights plan, following a drop in its share price due to the impact of the coronavirus pandemic.
Six Flags, which has shut down its theme park and water park operations until at least mid-May, has seen its share price significantly recently.
The new rights plan effectively guards against a potential hostile takeover, granting shareholders the ability to purchase more shares if any other shareholder gains over a 10 per cent stake in the company. This dilutes the hostile stake and makes a takeover more expensive.
As of this morning, the share price of Six Flags stood at US$11.41, down from $25.14 a month ago.
Six Flags said in a statement: “The board believes that the current trading price of company stock does not reflect the company’s intrinsic value. The rights plan is intended to enable the company’s stockholders to realise the long-term value of their investment, ensure that all stockholders receive fair and equal treatment in the event of any proposed takeover of the company, and to guard against tactics to gain control of the company without paying all stockholders an appropriate premium for that control.
“The rights plan applies equally to all current and future stockholders and is not intended to deter offers that are fair and otherwise in the best interest of the company’s stockholders.”
