Discount Auto Parts, Inc. Adopts Stockholder Rights Plan
28 November 2000
Discount Auto Parts, Inc. Adopts Stockholder Rights Plan
LAKELAND, Fla.--Nov. 27, 2000--Discount Auto Parts, Inc. today announced that its Board of Directors has adopted a stockholder rights plan and declared a dividend of one preferred stock purchase right (a "Right") for each outstanding share of common stock of the Company."We believe this plan is a prudent step in protecting the interests of Discount Auto Parts stockholders," said Peter Fontaine, Chairman and CEO. "This plan, which is similar to plans adopted by many U.S. public companies, does not prevent a takeover; however, it does seek to ensure that all stockholders will receive a fair price and equitable treatment in the event of an unsolicited attempt to acquire the Company. The plan is intended to encourage anyone seeking to acquire the company to negotiate in good faith with the Board of Directors but should not interfere with any acquisition of the Company on terms that are favorable and fair to all the stockholders. The adoption of the plan is not in response to any pending takeover threat and the Board is not aware of any planned takeover attempts. It is a precaution to guard against abusive or takeover tactics, such as partial tender offers and open market accumulations by which a third party might gain control of the Company without providing adequate value to all our stockholders."
The issuance of the Rights does not in any way affect the Company's business plans. The issuance of the Rights has no dilutive effect on the number of shares of common stock outstanding, will not affect reported earnings per share and will not change the manner in which the Company's common stock is currently traded.
The non-taxable dividend distribution of the Rights will be made on Dec. 14, 2000 to the Company's stockholders of record on that date. Initially, the Company will not issue certificates representing the Rights. Instead, the Rights will trade with and as part of the Company's common stock until such time, if ever, as the Rights become exercisable upon certain triggering events.
The Rights generally will become exercisable if a person or group of persons acquires 15% or more of the Company's common stock or announces a tender offer, the consummation of which would result in ownership by a person or group of persons of 15% or more of the Company's common stock. However, the fact that a person already owns 15% or more of the Company's common stock at the time the stockholder rights plan becomes effective generally will not cause the Rights to become exercisable unless that person acquires an additional 1.5% of the Company's common stock.
When exercisable, each Right will entitle the registered holder to purchase from the Company one one-hundredth of a share of the Company's Series A Junior Participating Preferred Stock, at an initial price of $35.00 per one one-hundredth of a share, subject to adjustment. The Preferred Stock is a new series of stock authorized in connection with the adoption of the stockholder rights plan.
In addition, if, after the Rights become exercisable, the Company is acquired in a merger or other business combination transaction, or sells 50% or more of its assets or earnings power, each Right will entitle its holder (other than the aquiror) to purchase, at the Right's then current exercise price, a number of the acquiring company's common shares having a market value of twice the Right's exercise price.
The plan also includes an exchange option. Generally, after the Rights become exercisable, the board of directors may, at its option, exchange part or all of the Rights for shares of the Company's common stock. Under this option, the Company would issue one share of common stock for each outstanding Right. This exchange would not apply to shares held by the person or group whose actions triggered the exercisability of the Rights.
Also, at the option of the board of directors, the Company may redeem all Rights for $.01 per Right at any time prior to the time the Rights become exercisable. The Rights are scheduled to expire on Dec. 13, 2010, unless earlier redeemed, exchanged or amended by the board of directors.