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Investing.com -- Shares of Victoria’s Secret & Co. (NYSE:VSCO) closed up 3.3% with an additional 0.5% gain after hours following the company’s announcement of adopting a "poison pill" strategy. The lingerie retailer’s move comes as a defensive measure against potential hostile takeovers after substantial stock accumulation by BBRC International Pte Limited, controlled by Brett Blundy.
The "poison pill," formally known as a limited-duration shareholder rights plan, was put into effect immediately and is set to expire in one year. The plan was a response to BBRC’s increased share position, now approximately 13%, and its transition from reporting as a "passive investor" to a Schedule 13D filer. BBRC’s corrective filings under U.S. antitrust law now allow it to acquire up to 49.99% of Victoria’s Secret’s voting stock, pending the end of a regulatory waiting period on May 21, 2025.
Victoria’s Secret’s board, with the guidance of independent advisors, decided on this strategy to protect the long-term interests of all shareholders. The board aims to prevent any single investor from gaining control without offering a premium to all shareholders. The decision comes amid a period of significant market dislocation in the retail sector, which the board believes does not reflect the company’s intrinsic value or its future prospects.
Chair of the Board Donna James stated, "The Board determined it was necessary to adopt a rights plan to protect the long-term interests of all Victoria’s Secret shareholders and guard against tactics to gain control of the Company without paying all shareholders an appropriate premium for that control."
The rights plan will issue one right for each share of common stock as of May 29, 2025. These rights will become exercisable if any person or group acquires 15% or more of the outstanding common stock, with certain passive investors having a 20% threshold. If triggered, rights holders, excluding the initiating party, can purchase additional shares at a 50% discount or exchange each right for one share of common stock. The plan does not prevent the future board of directors from redeeming the rights earlier than the one-year expiration date.
This strategic move by Victoria’s Secret is designed to ensure fair and equal treatment of all shareholders in the event of a takeover bid, allowing them to realize the long-term value of their investment. The company has not received any specific acquisition proposals and states that the rights plan is not intended to deter fair offers that are in the best interest of the shareholders.
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