Netflix Has Plans To Avoid Share Takeover

Netflix has integrated its streaming player in many consumer electronics devices including the XBox 360 (Photo credit: Wikipedia)

On Monday, some shareholders of Netflix announced a plan to gain majority shares of the company but Netflix has a plan to stop this event from occurring.

The plan is simple and is called the poison pill. If anybody tries to purchase a large amount of Netflix shares without consent of the board, Netflix can create more shares, making the takeover attempt much too costly.

Several days ago Carl Icahn bought 10% of the firm, which immediately sent up red flags at Netflix. He said the company would be great bait for many of the technology giants of the internet, including Amazon, Google, Verizon, and Apple.

If any group or investor tries to buy more than 10%, the poison plan will be put into action. Carl Icahn has a 9.98% stake right now.

Carl Icahn was not happy with the decision by the Netflix board. He said it was a bad ruling, discriminatory, and that the shareholders actions were too decided by the board.

Netflix does agree that they make a juicy target for other big companies, even thought they did poorly last quarter. Such a takeover might actually boost profits.

Larger companies might offer financial and technological support so  Netflix can give cheaper content to their customers.