Lafayette-based LHC Group, a provider of post-acute health care services, announced yesterday that it has adopted a so-called "poison pill" measure designed to fend off a hostile takeover. The tactic, which is common among publicly traded companies, is intended to make a hostile corporate takeover prohibitively expensive by offering a company's stockholders an opportunity to buy stock at a bargain price in the event that a single suitor acquires a high percentage of the stock.
LHC Group CEO Keith Myers says the plan was not adopted in response to a specific takeover proposal. "This rights plan is intended to protect our stockholders should LHC Group become the target of hostile or unfriendly takeover tactics," he says. Stockholders will vote on the plan at LHC Group's upcoming annual meeting.
Some of the key features of the plan include a 20 percent threshold for triggering events, a three-year term, an independent director evaluation provision (commonly called a TIDE provision) and a stockholder redemption feature allowing stockholders to vote at a special meeting that would be called to consider qualified offers.
In 2007 LHC Group's net income fell 4.9 percent to $20.6 million, or $1.20 a share, on a 36 percent increase in revenue to $298 million. Its stock price plunged after the company announced lower-than-expected fourth quarter earnings in late February. The stock closed Monday at $16.65, up 11 percent from the 52-week low of $15.04 set after the earnings announcement.