One of the corporate world’s most controversial takeover defenses is winning some unexpected fans.
The poison pill — which dilutes the ownership of hostile acquirers — has long been criticized as a tool to keep bad management teams in place and deny existing shareholders the right to profit from buyouts. But a takeover battle in Japan is now spurring endorsements for the tactic by corporate governance experts and influential proxy advisers, and even making some activist investors consider giving it support.
Tokyo-based Shinsei Bank Ltd. has asked shareholders to approve on Thursday its plan to use a poison pill defense against a proposed stake increase by SBI Holdings Inc. The argument in favor of Shinsei’s plan: It’s the best strategy to extract better terms for existing investors.