Here's an interesting way for management to boost a company's share price: Introduce a shareholder rights plan - otherwise known as a poison pill provision - to hold off a takeover offer. Potash Corp. of Saskatchewan Inc. used the tactic on Tuesday to fend off the advances of BHP Billiton Ltd. Now, Gammon Gold Inc. is making a similar move to fend off, well, anyone.
From The Canadian Press: "Gammon Gold Inc. says it has adopted a rights plan to give its board and shareholders time to react in the event of a hostile takeover bid.
"The Canadian company, which has all of its mining operations in Mexico, said Thursday that the plan wasn't in response to any actual or threatened takeover bid. It added the move also wasn't intended to block any takeover bids either.
"'The plan is designed to ensure that Gammon's shareholders are treated fairly in the event of a take-over bid for Gammon's common shares,' it said in a release. 'And that Gammon's board of directors and shareholders will have adequate time to evaluate any unsolicited takeover bid and, if appropriate, evaluate and pursue other alternatives to maximize shareholder value.'"
Puzzled? At least the move is having an impact on Gammon's share price. The shares were up 5.5 per cent on Thursday afternoon, well ahead of the moves in the price of gold and its gold producer peers.
David Berman