Nuance Adopts "Poison Pill" Provisions

Burlington, Mass.-based Nuance Communications (NASDAQ: NUAN  ) today announced what it is calling a stockholder rights plan.

The plan, which some refer to as a "poison pill," aims to put the brakes on any hypothetical attempts to acquire the company without management's assent. Such preventive strategies allow existing stockholders to acquire additional shares at a lower prices should an outside entity acquire a large stake. The voice recognition software company said the plan is not in response to any unwelcome bids, though activist investor Carl Icahn has been building up a stake.

Under the plan, holders of Nuance stock at close of business Aug. 29 will be entitled to receive one "right" for each share of stock they own.

In the event of a takeover attempt, defined as a person or group acquiring 20% or more of Nuance's stock without prior approval from the Board, the rights entitle their holders to buy "one one-thousandth of a share of a new series of participating preferred stock at an exercise price of $87.00 per right," and upon exercising the right, to further buy up to $174 worth of Nuance common shares. The rights further entitle their holders to purchase an interest in any "acquiring entity" that emerges into or succeeds in taking over Nuance.

The aim of "poison pills" such as these is generally to dilute the stake of any hostile acquirer, making a takeover more difficult, and expensive, to accomplish. Nuance made a point of emphasizing that "the Rights Plan was not adopted in response to any current effort to acquire control of Nuance."

-- Material from The Associated Press was used in this report.

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  • Report this Comment On August 20, 2013, at 7:21 PM, davewallacenac wrote:

    The "poison pill" now provides NUAN the opportunity to become a 12 dollar stock......

  • Report this Comment On August 21, 2013, at 12:55 AM, webbhk wrote:

    Once again the board of a US company starts to behave like owners, giving itself a veto over changes in ownership. This can then be used to bargain for golden parachutes, retention bonuses, or other benefits upon a change of control, or simply to frustrate the wishes of shareholders who own the company. In the UK, Hong Kong and several other places, such behavior is prohibited under the Takeover Code, and someone acquiring 30% or more of a company must make a general offer to all shareholders at the highest price paid by that person in the preceding 6 months.

    David Webb

    Founder, Webb-site.com

    Member of HK's Takeover Panel

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