Determine shareholder rights plan

1. Apple Inc. is one of the best-known global technology companies. Who are Apple's primary customers? Current and potential competitors? Suppliers? How would you assess Apple's bargaining power with respect to its customers and suppliers? What are Apple's strengths and weaknesses versus its current competitors? Would an acquisition be appropriate to capitalize on these strengths and/or mitigate the weaknesses?

2. On Monday, November 5, 2012, Netflix Inc. adopted a shareholder rights plan intended to block activist investor Carl Icahn from expanding his nearly 10% stake in the company. Under the plan, Netflix's shareholders will be given the right to buy more stock if any individual investor acquires more than a 10% stake in the company.

(a) What is a shareholder rights plan and how would such a plan help to block an activist investor from expanding his/her stake in a company?

(b) Shareholder rights plans are one example of corporate takeover defenses. Discuss four other defenses that a company can employ to defend itself against an unwanted takeover attempt, explaining each defense and identifying how it helps to protect against an unwanted bid.

(c) Do you believe that takeover defenses are more motivated by the target's managers attempting to entrench themselves or to negotiate a higher price for their shareholders?


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Finance Basics: Determine shareholder rights plan
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