Clarify Inc, the San Jose, California help desk company, has implemented a poison pill in the form of a shareholder rights plan to help ward off an unwanted take-over. It says the rights are designed to guard against partial tender offers and other abusive tactics that might be used to gain control of the company without paying all stockholders a fair price. Under the plan, the board is distributing, as a dividend, one right for each share held. If there is a bid for the company, or an attempt is made to buy 15% of the shares, each right can then be used to buy one one-thousandths of a newly issued share of preferred stock of the company at an exercise price of $95. Then, if a bidder moves in, holders can buy shares, to twice the value of this exercise price – instantly diluting the predator’s holding. The help desk market has been so buoyant that there have been predictions that financial and manufacturing software companies would like to enter the sector and a bid for a company like Clarify would be an obvious way to become a major force. Last year the company made a profit of $8.1m on revenue of $56m.
