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Exelixis, Inc. Message Board

  • wilderguide wilderguide Jan 27, 2013 12:51 AM Flag

    The "Window Closing" Pill


    This also from the Harvard Law Forum wrt 13D filings by non-passive investors:

    "This rights plan has a limited objective that of compelling disclosure so that a board of directors, stockholders and the trading markets can evaluate the ownership position of a substantial non-passive investor. The plan is benign because the acquirer is not precluded from acquiring more than a five percent voting or financial interest in a company and it would not create an impediment to purchasing shares pursuant to a tender offer. Nevertheless, the acquirer might no longer be able to acquire stock as cheaply as it would absent the rights plan because the accelerated disclosure obligation likely would result in an increase in the market price of the shares. Presumably, most would agree that this benefits stockholders who would otherwise have sold at a lower price while the acquirer was surreptitiously purchasing shares. (Arguably, the plan might deter some activists from undertaking an acquisition program because the expected profit from the program could be reduced.) The plan can stand alone or be incorporated into an existing plan."

    I'm a'gettin' them dern warm fuzzies again...


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    • $$$$

      "In light of the ability of activists or raiders to use the ten-day window for filing a Schedule 13D and to purchase shares before their stake in a company is required to be disclosed and the use of derivatives to defer or avoid a 13D reporting obligation, companies should consider a new form of rights plan the purpose of which is to compel disclosure by acquirers of stock and derivative ownership in excess of five percent and block acquisitions of stock until the disclosure is made. In essence, the plan would close the ten-day purchasing window that currently exists under Rule 13d-1 and include all derivatives in the definition of beneficial ownership of stock."

      The spirit is willing, but the flesh is weak. I'm done for tonight.
      I highly reco the "window closing blog on the HLF. It's a dandy read...

      • 1 Reply to wilderguide
      • My understanding based on the quote below from a corporate lawyers site is that since the filing was dated 12/31/12 it had to be filed by the end of the year (because they already filed a required 13G ) the stock was purchased, but it became a 13D-1(c) 10 days after they surpassed the 5% threshold, which now allows Meditor to buy more because they have disclosed their position. However, because they filed the "short form" of 13D they don't have to disclose who they're buying it for. It's difficult to say whether it's a passive investment or an activist trying to influence or takeover the company, and the 13D-1(c) is vague for the specific purpose of public disclosure without revealing the investors intent. Yeah, wilder this does bring up some warm fuzzies.

        "Most activist investors at some point will face the question of
        whether, and if so when, they are required to file a Schedule 13D with
        the SEC for an investment position for which a 13G has previously
        been filed. The easy answer is that the filing must be made when the
        position is no longer held for investment but instead is held with the
        purpose or effect of changing or influencing control of the issuer. The
        hard part is in determining when this occurs.
        Any person who, after directly or indirectly acquiring beneficial
        ownership of any class of registered equity securities (or certain
        unregistered equity securities), is directly or indirectly the
        beneficial owner of more than 5% of that class, must file a Schedule
        13D with the SEC within 10 days.
        A Schedule 13D requires detailed disclosure, including information regarding the background of theinvestor, the purpose of acquiring the stock and arrangements with
        the issuer. Schedule 13D also requires prompt updates in the event
        of material changes. However, such investors who do not wish to file a 13D may be eligible
        instead to file a short-form statement on Schedule 13G, which requires
        only basic information and in most cases must only be updated periodically."

        Sentiment: Strong Buy

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