Kodak Adopts ‘Poison Pill’ to Protect Against a Hostile Takeover

If you look at the price of Kodak’s stock, you’ll see that the company is currently worth about $600 million — a figure that may be significantly lower than what its digital imaging patents could sell for. With the risk looming that a buyer might try to acquire the patents by simply taking over the company, Kodak is taking evasive maneuvers.

The Rochester photo and imaging company said Monday that its board had created a special class of stock to serve as a firewall in case someone tries to take a majority interest in the company.

Under the terms of the deal, if any investor tries to buy 5 percent or more of the company over the next three years, Kodak would issue all current stockholders shares of preferred stock. As a result, any takeover attempt would require the purchase of additional shares that could make the cost prohibitive.

In the business world, this tactic is known as a “poison pill“.

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