Navistar adopts poison pill strategy

CHICAGO (April 26) — Navistar International Corp. indicated that it has no intention of being a takeover target with the adoption of a “poison pill” strategy last week to help ward off an unsolicited offer.

The provision would be triggered only if a group or person bought or made a tender offer for 15% or more of its shares outstanding. Navistar shareholders would then have the right to acquire additional Navistar common stock at a 50% discount.

The company said it was not aware of any hostile takeover attempt at present. However, there has been speculation that Sweden’s AB Volvo, the world’s second-largest truck producer behind DaimlerChrysler, is interested in acquiring Navistar.

Navistar chairman, president, and CEO John Horne said the plan is designed to encourage any potential acquirors to negotiate with the board of directors rather than launch an unsolicited hostile takeover attempt.

“The Navistar board of directors believes the rights plan is in the best long term interests of shareowners because it maintains the board’s ability to effectively represent the interests of the company and shareowners in the event of an unforeseen unsolicited takeover attempt,” Horne said.

“Abusive takeover tactics can deprive shareowners of the full value of their shares and squeeze them out of their investment without giving them any real choice.”

The new rights have been declared as a dividend to shareowners of record as of the close of business on May 3, 1999. The rights will automatically accompany and trade with the shares of Navistar common stock on the New York Stock Exchange. The rights dividend is not taxable and will expire on May 3, 2009, unless redeemed, exercised, or exchanged.