Rent-A-Center Inc. said Tuesday that it adopted a shareholder rights plan, also known as a "poison pill," to reduce the likelihood that an investor would gain unsolicited control of the company. The rent-to-own operator declared on March 25 a dividend of one preferred stock purchase right for each outstanding common stock, payable on April 14 to shareholders of record on April 7. The right allows shareholders to buy one-thousandth of a share of newly created Class D preferred stock for $25, which can be exercised if an investor acquires a stake of 15% or more of outstanding common stock. If exercised, the right entitles its holder to buy a number of common shares. The rights plan comes after Engaged Capital Holdings LLC disclosed in a filing on March 23 that it now owns about 9 million shares, or 16.9% of the shares outstanding. Rent-A-Center's stock, which edged up 0.9% in premarket trade, has tumbled 19% year to date through Monday, while the S&P 500 has gained 4.6%.
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