Netflix Hostile Takeover Bid; Company Adopts "Poison Pill" Defense

Netflix is prepping for possible hostile takeovers using "shareholder rights."

The new plan has been adopted to help defend the video delivery and streaming site from attempted takeovers such as the recent action by Carl Icahn.

Netflix released a statement saying: "The Rights Plan is intended to protect Netflix and its stockholders from efforts to obtain control of Netflix that the Board of Directors determines are not in the best interests of Netflix and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Netflix." 

The new shareholder rights plan is designed to discourage takeovers by making them as expensive as possible. The company will be allowed to offer a new preferred stock that will reduce the influence of those who buy large percentages of current stock.

The plans, also known as poison pills, force an entity looking to take the company over to negotiate share prices with the board of directors instead of with the shareholders.

Every stockholder will have one right for each outstanding share of common stock in the company. The adopted plan will give the stockholders a chance to buy one one-thousandth of a share of the new preferred stock at an exerciser price of $350 per each right.

These rights can be used if an entity acquires 10 percent of Netflix stock or a group of institutional investors acquires 20 percent. The rights can be redeemed until they expire on Nov. 2, 2015.

A takeover attempt was made last week by billionaire Carl Icahn when he acquired a ten percent stake of Netflix after years of unsuccessfully trying to acquire the company.

Netflix stock was lifted by news of Icahn's stake last week. As of 10:45 ET Monday, it was up 1.69 percent to $78.20 per share.