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Netflix Inc. adopted a poison pill defense against a hostile takeover, days after activist investor Carl Icahn disclosed a stake in the video rental company.

The move is aimed at preventing an outsider who lacks Netflix board approval from accumulating a stake of 10 per cent or more, the company said in a statement. The board approved the provision on Friday. It remains in effect for three years.

The poison pill is a common strategy used by companies in response to Mr. Icahn.

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On Wednesday, Mr. Icahn disclosed that he had amassed control of 10 per cent of Netflix shares, but most of his purchases were in the form of call options. The billionaire, who is known for shaking up management, said he saw Netflix as an attractive acquisition target for a number of companies.

The poison pill defense "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," the company said in a statement.

The plan is not intended to interfere with any merger, tender or exchange offer, or other business combination approved by the board, the company added.

Mr. Icahn was not immediately available to comment on Monday.

"If someone wants to acquire Netflix they don't need Ichan to do it," said Michael Corty, an analyst with Morningstar, who has a sell rating on Netflix.

Netflix has been the subject of periodic acquisition speculation, with Microsoft Corp. and Amazon.com Inc. among the names that have surfaced.

Brett Harriss, an analyst with Gabelli & Co, said he disagreed with the approach taken by Netflix in response to Mr. Icahn. "We don't support poison pills. They serve to entrench management and the board of directors to the expense of shareholders," Mr. Harriss said. "It's frustrating to see the board of directors respond this way."

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Netflix was a Wall Street darling with red-hot growth that boosted shares as high as $304 (U.S.) in July 2011. Many investors soured on the company after it imposed an unpopular price rise in the face of new competition, and increased spending on content and an international expansion.

CEO Reed Hastings argues it is worth the investment to get into foreign markets ahead of rivals. The company projects a fourth-quarter loss due to start-up costs in four Nordic countries.

Under the plan, Netflix is issuing one right for each current share to common stockholders at the close of business on Nov.2. If the provision is triggered, each right will allow stockholders to buy one one-thousandth of a share of a new series of participating prefered stock at an exercise price of $350 per right.

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