FILE - Southwest Airlines Boeing 737 lands at Manchester Boston Regional Airport, June 2, 2023, in Manchester, N.H. Southwest Airlines has adopted a poison pill following activist investor Elliott Investment Management taking a significant stake in the company. The airline said Wednesday, July 3, 2024, that the shareholder rights plan is effective immediately and expires in a year. For any extension to occur, Southwest shareholders would need to give prior approval.
The airline said Wednesday that the shareholder rights plan is effective immediately and expires in a year. Southwest shareholders would need to give prior approval for an extension.Shareholder rights plans, or “poison pills,” allow existing shareholders to acquire shares at a discounted rate to discourage a takeover by an outside entity. Southwest's plan is triggered when a shareholder acquires 12.
Southwest said that it adopted the rights plans due to several concerns, including Elliott's approximately 11% stake in the company and the flexibility that the firm has to acquire a significantly greater percentage of Southwest's voting power across two of its funds starting as early as July 11. “In light of the potential for Elliott to significantly increase its position in Southwest Airlines, the board determined that adopting the rights plan is prudent to fulfill its fiduciary duties to all shareholders," Southwest Chairman Gary Kelly said in a statement. “Southwest Airlines has made a good faith effort to engage constructively with Elliott Investment Management since its initial investment and remains open to any ideas for lasting value creation.
Southwest has said that it remains confident in Jordan and its management and their ability to drive long-term value for shareholders. For his part,has said that he won't resign and that in September his leadership team will present a plan to boost the airline's financial performance.Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.