Dril-Quip, Inc. (NYSE:DRQ), manufacturer of offshore drilling and production equipment, announced that its Board of Directors has adopted a Stockholder Rights Plan designed to protect the company's stockholders from coercive or unfair takeover techniques.
Terms of the Rights Plan provide for a dividend distribution of one right for each outstanding share of common stock to holders of record at the close of business on December 5, 2008. The Rights Plan would be triggered if an acquiring party accumulates 15 percent or more of the company's common stock and would entitle holders of the rights to purchase either shares of the company's stock or shares in an acquiring entity at half of market value. The company would generally be entitled to redeem the rights at $0.01 per right at any time until the tenth day following the time the rights become exercisable. The rights will expire on November 24, 2018.
Commenting on the Rights Plan, the company's Co-Chief Executive Officers said, "The Rights Plan has been adopted because of stock market instability and not in response to any current accumulation of shares or takeover situation. The plan is intended only as a general deterrent to potentially unfair or coercive takeover practices that could be employed. In light of the current circumstances in the financial and securities markets, we believe the Stockholder Rights Plan represents a sound and reasonable means of safeguarding the interests of the company's stockholders. The Stockholder Rights Plan we have adopted is similar to plans that have been adopted by more than 1,800 other publicly traded companies."
The company plans to outline the specific details of the new Rights Plan in a current report to be filed on Form 8-K with the Securities and Exchange Commission.