CSK Auto tries to block a takeover

PHOENIX In response to O'Reilly Automotive's proposal to acquire all outstanding shares of CSK Auto, CSK has adopted a shareholder rights plan to ensure that its investors can assess all of the parties interested in the company.

CSK said that its board of directors, with assistance from JPMorgan, has commenced a process in which more than 20 parties to date have been given access to information about the company so that they can develop strategic alternatives for the board’s consideration. The company added that O'Reilly Automotive, which announced its bid for CSK's outstanding shares on Feb. 1, has chosen not to participate in the process.

CSK said that the rights plan will be triggered any time there is an attempt to buy 10% or more of the company's common stock, or upon the consummation of any transaction in which CSK is not the surviving entity, the outstanding shares of CSK common stock are exchanged for stock or assets of another person, or 50% or more of CSK’s consolidated assets or earning power are sold. If a party exceeds the ownership thresholds and the rights are not redeemed, each right will entitle the holder, other than the triggering party, to purchase a number of shares of the company’s common stock having a value of twice the $45 exercise price. Such an exercise would dilute the triggering party’s holdings in CSK.