(PHOTO: REUTERS / Robert Galbraith)
The Netflix board of directors has elected to adopt a "poison pill" plan in an effort to stave off a possible hostile buyout.
Carl Ichan, a 74-year-old businessman who also bought out Blockbuster video, may be considering a possible takeover of Netflix after buying over 10 percent of the company's stock. The 10 percent purchase helped to boost Netflix stock, which has seen a 75 percent loss of value in the past 15 months, but also made the company directors wary of a possible takeover.
The company was previously open to accepting advice, after Ichan's purchase rose the value of the stock by 15 percent.
"We have many shareholders, now including Mr. Icahn, and we're always open to their perspective on how to build on our success," a Netflix representative told CNET in an e-mailed statement.
But Ichan has alluded to the idea that Microsoft should consider the option of acquiring the streaming-video company, prompting Netflix to respond by adopting a stakeholder rights plan, or something that is often referred to as a "poison pill."
"Netflix announced that its Board of Directors adopted a stockholder rights plan (the "Rights Plan" or "Plan") and declared a dividend distribution of one right ("Right") for each outstanding share of Netflix common stock," the company released in a statement.
"The Rights Plan is intended to protect Netflix and its stockholders from efforts to obtain control of Netflix that the Board of Directors determines are not in the best interests of Netflix and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Netflix."
While Icahn is a successful, self-made billionaire that has bought out a number of companies, his ventures with Blockbuster did not pan out well. According to the company book "Netflixed," Icahn played a role in leading the video rental company into bankruptcy after making poor management decisions which included persuading company CEO John Antioco to step down. Blockbuster filed for bankruptcy two years later.