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Technology Stocks : The New QLogic (ANCR)

QLGC 16.07

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Aug 24 5:00 PM EST

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To: iceburg who wrote (23461)	7/22/1999 9:06:00 AM
From: Alan Bershtein	Read Replies (1) of 29386

Steve, Sorry to be so dense but I still don't get it. Here is the original passage from the shareholder rights plan adopted in November 1998... The Company has declared a dividend of one right for each common share outstanding on November 10, 1998. Each right will entitle a shareholder to buy a fraction of a share of a newly authorized series of preferred stock at an exercise price of $20 per share. The rights will become exercisable in the event that a person or group acquires 15% or more of Ancor's common shares or a tender offer is commenced that would result in ownership by a person or group of 15% or more of Ancor's common shares (subject to certain exceptions). How does increasing the exercise price from $20 to $200 benefit current shareholders? The potential suitor needs to acquire 15% of the common stock before this "dividend" kicks in. As I read it, an increase in the exercise price to current shareholders actually reduces the cost to a potential suitor because current shareholders would be less likely to to exercise at a $200 price vs. a $20 price. What am I missing? Again, sorry to be so slow. I'm just trying to understand.

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