Victoria’s Secret adopts poison pill to keep Australian investor at bay
Victoria’s Secret & Co. is looking to prevent a hostile takeover by an activist investor.
The lingerie giant said it has adopted a limited-duration shareholder rights plan — most commonly described as a poison pill — to “protect the best interests” of all shareholders. The moves comes after Australian entrepreneur Brett Blundy’s BBRC International increased its stake in the company to 13%.
The rights plan is intended to reduce the likelihood that any person or group gains control of the company through open-market accumulation or other tactics without paying an “appropriate control premium” that usually accompanies an acquisition. It expires in one year and will allow shareholders to buy additional stock at half price if any party acquires 15% of Victoria’s Secret stock.
In a statement, Victoria’s Secret said BBRC has a track record of acquiring controlling interests in retail companies and that it recently launched a new business described as a global lingerie, sleepwear and beauty brand.
Victoria’s Secret also said that the private investment firm bought shares of the company “in violation of U.S. antitrust law for nearly three years by failing to file forms required under the Hart-Scott-Rodino Act and observe the regulatory waiting period.” BBRC has since made “corrective filings” and it could theoretically acquire up to 49.99% of Victoria’s Secret stock once the waiting period has expired, which is expected to occur at 11:59 p.m. ET on May 21.
“In light of the circumstances and consistent with its fiduciary duties, the Board determined it was necessary to adopt a rights plan to protect the long-term interests of all Victoria’s Secret shareholders and guard against tactics to gain control of the vompany without paying all shareholders an appropriate premium for that control,” said Donna James, chair, Victoria's Secret.
In her statement, James noted that Victoria’s Secret has engaged in “open and constructive dialogue” with Blundy and other BBRC representatives during the past three years and “appreciates” BBRC’s investment in the company.
“We value Mr. Blundy’s input as a shareholder and look forward to continuing our dialogue,” she said. “Our Board and management team remain focused on effectively managing near-term headwinds in the macro environment, while pursuing a focused strategy to unlock the full potential of our brands and business under our new CEO Hillary Super.”
[READ MORE: Victoria's Secret taps chief executive of Rihanna's Savage X Fenty as its new CEO]
Victoria’s Secret has global footprint of approximately 1,380 retail stores in nearly 70 countries.
