Saturday, December 20, 2014

AmerisourceBergen shareholders vote against 'poison pill'

The Chester County company will take the vote under advisement, but it's not bound to drop the anti-takeover defense.

AmerisourceBergen shareholders vote against 'poison pill'

For anyone who thinks shareholders are too shellshocked to vote for change at corporate annual meetings this year, I direct you to AmerisourceBergen Corp.

This Tredyffrin Township company is a giant in the wholesale pharmaceutical distribution business. Profitable, it had $70 billion in revenues for its fiscal year ended Sept. 30.

While its stock price is down year over year, AmerisourceBergen has performed better than many other stocks. The Standard & Poor’s 500 index declined 42 percent over the last year. AmerisourceBergen shares are down only 19 percent.

Kenneth Steiner, an AmerisourceBergen shareholder from Great Neck, N.Y., proposed that the company drop its shareholder rights plan, commonly called a “poison pill.” Over the years, Steiner has proposed many resolutions related to corporate governance, especially pressuring companies to spit out their poison pills.

It’s an anti-takeover defense. Once a hostile buyer accumulates a certain stake in a target, shareholders have the right to buy shares at a bargain price, making any hostile bid more expensive for the buyer.

Companies say poison pills help them repel unfair or coercive takeover offers. Critics say the tactic tends to protect managements more than the companies they run.

AmerisourceBergen has had its poison pill in place since 2001. It kicks in once an acquirer accumulates a 15 percent stake.

After Steiner had submitted his proposal to redeem the poison pill, the board of directors’ governance and nominating committee reviewed its current plan, according to the latest proxy statement. But it recommended keeping the pill, and the board advised shareholders oppose Steiner’s proposal.

Instead, shareholders overwhelmingly voted in favor of Steiner’s proposal. Now, that doesn’t mean AmerisourceBergen will go cold-turkey off the pill. Like all shareholder-sponsored proposals, this one isn’t binding. The company said only that it would take the voting results under advisement.

The spring annual meeting season hasn’t even begun, and shareholders are definitely restless.

Mike Armstrong Inquirer Columnist
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Mike Armstrong Inquirer Columnist
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