France authorizes 'poison pills' to thwart hostile takeovers
227 words
23 March 2006
13:03
Associated Press Newswires
English
(c) 2006. The Associated Press. All Rights Reserved.
PARIS (AP) - French lawmakers Thursday adopted measures allowing companies to use so-called "poison pill" defenses to thwart hostile takeovers.

Under the new takeover law, approved in a final reading by the Senate, French companies will be allowed to issue warrants to shareholders to fend off a hostile bid.

Warrants allow existing shareholders to acquire newly issued stock at an advantageous price, diluting the value of a company's shares -- which can force a hostile bidder to withdraw its offer.

The amendment allowing warrant issues was introduced after Mittal Steel Co. launched a hostile bid for Arcelor SA, a Luxembourg-based steelmaker that is also quoted on the Paris stock exchange.

A second amendment -- introduced in the wake of unconfirmed reports last year that U.S. soft drinks and snack maker PepsiCo Inc. was mulling a bid for French food group Danone SA -- allows French market authorities to force potential bidders to state their intentions if rumors begin to affect share prices.

Laurence Parisot, the head of French employers' organization Medef, said the new measures would place French companies on an equal footing with foreign firms. Poison pill defenses have been used by U.S. companies for about two decades.

"It's a sign of pragmatism and good sense, at an opportune moment," Parisot said in a statement.