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Dive Brief:
Victoria’s Secret & Co’s board of directors approved the adoption of a limited-duration shareholder rights plan, or poison pill, to protect the best interest of shareholders, according to a Tuesday announcement. The plan was effective Tuesday and expires in one year.
The strategy is in response to the “substantial accumulation” of Victoria’s Secret stock by investment firm BBRC International. BBRC began increasing its position in Victoria’s Secret in March to around 13% of outstanding shares.
Victoria’s Secret will issue one right per share of common stock on May 29, which will become exercisable if a shareholder acquires a 15% or higher stake.
Dive Insight:
Victoria’s Secret is pushing back after an Australian investment firm acquired a considerable amount of the company’s stock.
Victoria’s Secret said that, for nearly three years, BBRC acquired stock in violation of U.S. antitrust law. The retailer said the investment firm failed to file forms required under the Hart-Scott-Rodino Act. BBRC has since made corrective filings that would permit the firm to acquire nearly 50% of Victoria’s Secret’s voting stock once the waiting period expires on Wednesday.
A poison pill is a way of deterring investors from amassing enough shares to take control of a company or stage a takeover without the board’s approval.
“In light of the circumstances and consistent with its fiduciary duties, the Board determined it was necessary to adopt a rights plan to protect the long-term interests of all Victoria’s Secret shareholders and guard against tactics to gain control of the company without paying all shareholders an appropriate premium for that control,” Donna James, board chair, said in a statement.
BBRC did not respond to Retail Dive’s request for comment.
Victoria’s Secret has been in talks with BBRC representatives and its owner, billionaire businessman Brett Blundy, for the past three years. “We value Mr. Blundy’s input as a shareholder and look forward to continuing our dialogue,” James said.
However, the retailer pointed to BBRC’s track record of acquiring controlling interests in retail companies and its recent launch of lingerie, sleepwear and beauty brand, Léays.
Blundy also founded Bras N Things in the 1980s and eventually sold it to Hanesbrands in 2018 for around $400 million.