Servotronics Inc. has adopted a shareholder rights anti-takeover defense plan.
The so-called “poison pill” anti-takeover defense is designed to force a potential suitor to negotiate a friendly deal with company officials by making hostile bids too expensive.
The Elma motion control equipment and cutlery maker said the plan will protect the interests of its shareholders from “abusive takeover tactics and attempts to acquire shares from some or all of the shareholders at an inadequate price.”
The shareholder rights plan, which is common among publicly traded companies, grants shareholders the right to purchase a share of preferred stock if a person or investor group acquires 25 percent or more of Servotronics’ stock or announces plans for a tender offer that could lead to the acquisition of at least a 25 percent stake in the company.
The rights entitle Servotronics shareholders to purchase one one-hundredth of a share of the new series of preferred stock at an exercise price of $32.
The rights, which expire in 2022, were distributed to shareholders earlier this week.