Southwest adopted a shareholder rights plan to fend off an effort from activist Elliott Management to oust CEO Bob Jordan and chairman Gary Kelly.
Southwest Airlines has adopted a shareholder rights plan, also known as a poison pill, to fend off an effort from activist Elliott Management.announced Wednesday that it has adopted a shareholder rights plan, more commonly known as a"poison pill," in response to activistThe poison pill will only activate if Elliott — or another investor — acquires at least 12.5% of the company.
Southwest said the poison pill was adopted in part because Elliott had made filings with antitrust authorities that would allow the activist to acquire an even larger stake."Southwest Airlines has made a good faith effort to engage constructively with Elliott Investment Management since its initial investment and remains open to any ideas for lasting value creation," Kelly said in a statement.
Such a provision would dilute Elliott's influence and power over voting. Companies often adopt shareholder rights plans in response to an activist threat; rental car company Bank of America and Morgan Stanley serve as Southwest's bankers. Vinson & Elkins and Kirkland & Ellis, two law firms with well-regarded activism defense practices, are Southwest's lawyers.Pennsylvania
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