CNET Adopts Poison Pill In Bid To Stymie Jana

Date: Tuesday, January 15, 2008
Author: FINalternatives

CNET is going nuclear in its battle with a pair of activist hedge funds. The Internet media group on Friday announced it has instituted a poison-pill provision “to deter coercive takeover tactics.”

Activist hedge fund Jana Partners, which owns a 10.6% voting stake and roughly 8% non-voting stake in the San Francisco-based company, last week launched a bid to take control of CNET’s board. Jana, which is backed by fellow hedge fund Sandell Asset Management, which owns a roughly 5% non-voting stake in CNET, has proffered a slate of board nominees, as well as a proposal to boost the size of CNET’s board, filling each of the new seats with Jana-nominated directors.

Jana managing partner Barry Rosenstein blasted the move as an “outdated and unpopular entrenchment mechanism” designed to thwart the hedge fund’s bid to improve CNET’s flagging stock price.

Under the poison pill, shareholders will be issued warrants entitling them to effectively buy two CNET shares for the price should any entity acquire 15% or more of the company’s common stock. That holder would not be entitled to buy new shares, effectively diluting its ownership stake.