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Gold/Mining/Energy : AIT Advanced Information Technologies Corp.
AIV 5.285-0.8%3:59 PM EST
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To: Serge Collins who wrote (72)7/28/1998 11:36:00 PM
From: Lee Matheson  Read Replies (1) of 130
 
A shareholders' rights plan is supposed to protect the shareholders.

If a company has more cash (and other assets), after all debits
are paid off, than what the shareprice indicates, then the company
is ripe for a take-over attempt, that may not drive up the share
price (this lack of upward price movement would most likely be true during a market correction, or during a bear market).

A company could be theoretically bought for a low price, and then
have the component pieces sold at a much higher price. The
existing shareholders may not see the benefit of the take-over,
as they are "squeezed" out of holding their shares.

I think a Shareholders rights plan is supposed to minimize the
chance of things like this taking place.

I agree it is easy to be concerned that management is just trying
to protect their own positions (when a shareholders rights plan
is announced), but I'm not certain that is the case here.
In the cases I have seen where management is protecting their
jobs, there usually is not a large shareholder (but rather a
series of smaller shareholders). I think two members of the
AIT Board of Directors still hold 25% of the company, and
presumeably the Shareholders rights plan originates from them?
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