Mentor Graphics' (NASDAQ:MENT) initial "Rights Agreement" filed with the SEC on June 25, 2010, was recently amended for the second time in an effort to make a potential acquisition effort more difficult, also known as a "poison pill," the company announced.
A poison pill is a tactic employed by a company to defend itself against an acquisition, most often via a hostile takeover, by making a takeover prohibitively expensive. According to Mentor Graphics, its latest amended rights agreement is not "in response to any acquisition proposal."
However, in moves that would seem aimed at dissuading potential suitors, Mentor Graphics' latest update to its rights agreement includes an increase in the "ownership threshold" to determine what constitutes an "Acquiring Person," from 15% of Mentor Graphics outstanding stock to 20%, according to its recent SEC filing.
The amendment also raises the exercise price for a proposed acquirer of Mentor Graphics. As per the updated agreement, the "exercise price per right issued pursuant to the Rights Agreement is increased from $65 to $90." A new qualifying offer provision has also been added. Going forward, if a pending offer to buy Mentor Graphics is submitted to its board of directors, they are required to call a special meeting allowing its stockholders an opportunity to vote on the offer.
Finally, Mentor Graphics extended the terms of the most recent amended rights agreement June 30, 2015. The company provides electronic design automation software and hardware solutions to automate the design, analysis, and testing of complex electro-mechanical systems, electronic hardware, and embedded systems software.