Cal Fed Bancorp said it has adopted a stockholder rights plan for protection from hostile takeovers.
The measure, known as a poison pill, takes effect if a person or company buys 15% or more of the company's stock without the board's permission. The plan grants, among other things, all stockholders except the unapproved buyer the right to acquire $110 worth of Cal Fed stock for $55.
Cal Fed insisted that the plan "was not adopted in response to any acquisition activity." But a spokesman said Wednesday that the takeover war for First Interstate Bancorp provided "indirect motivation."
Poison pills are designed to thwart hostile takeovers by forcing unwanted suitors to negotiate with the board. In theory, the losses from a poison pill are too painful for hostile suitors to swallow. However, hostile suitors can circumvent poison pills by suing to have them invalidated.
Poison pills are common at big, publicly held companies. The Cal Fed spokesman said that some of its largest rivals, including H.F. Ahmanson & Co. and Great Western Financial Corp., have them.