What is a Direct Stock Purchase Plan?

The stock purchase warrant plan refers to the issue of special warrants by the target company. It is stated in the special warrants that when the target company has an acquisition emergency, if the acquiring company buys 30% of the target company's shares or some-shareholders have accumulated More than 20% of the company's stock, the warrant investor can pay the performance price to purchase the preferred shares of the target company and can be converted into the common shares of the acquiring company after the acquiring company acquires the target company: Conversely, the conditions for warrants may also provide that The target company's board of directors may redeem this right within a short period of time after the emergency.

Stock Purchase Warrants Program

Right!

The stock purchase warrant plan refers to the issue of special warrants by the target company. It is stated in the special warrants that when the target company has an acquisition emergency, if the acquiring company buys 30% of the target company's shares or some-shareholders have accumulated More than 20% of the company's stock, the warrant investor can pay the performance price to purchase the preferred shares of the target company and can be converted into the common shares of the acquiring company after the acquiring company acquires the target company: Conversely, the conditions for warrants may also provide that The target company's board of directors may redeem this right within a short period of time after the emergency.

Chinese name

Stock Purchase Warrants Program

Meaning

Target company issues special warrants

Types of

Warrants Plan

Meaning

Better planning

Plan type

(1) Overturn plan.

Attaching 1 special warrant per share is the main measure to implement the overturn plan. When a company encounters an emergency, special warrants have convertible power within a throw limit. Specifically, assuming that each stock market price is S100 at the time of the acquisition, the target company's shareholders pay 5 performance shares by delivering the performance cost of $ 200, but the foreign acquirer is discriminated against in order to dilute the shares in the attacker s hands, Increase its acquisition costs.

(2) Turn into the plan.

The turnover plan means that in the event of an emergency, the shareholders of the target company can sell the originally set options to the target company at a premium of 100%, that is, the original $ 200 convertible shares can be sold back to the target for $ 400. the company. Although the stock purchase warrants program is not very effective at preventing hostile takeovers (because the attacker owns 20% of the target company's shares), it has achieved the desired effect of increasing the cost of the attacker's acquisition.