DWR Establishes Shareholder Rights Plan

May 24, 2006  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on May 2006 San Francisco-based contemporary retailer Design Within Reach has adopted a Stockholder Rights Plan, intended to enable the company’s shareholders to realize the long-term value of their investments.

In a statement released yesterday, the company said the plan will not prevent a takeover, but should encourage anyone seeking to acquire the retailer to negotiate with the board of directors before attempting a takeover. The plan will expire in 2016.

Under the plan, the board of directors declared a dividend distribution of one preferred share purchase right on each outstanding share of Design Within Reach common stock. Subject to limited exceptions, the rights will be exercisable if a person or group acquires 15 percent or more of the retailer’s common stock or announces a tender offer for 15 percent or more of the common stock. Under certain circumstances, each right will entitle stockholders to buy one one-thousandth of a share of newly created Series A Junior Participating Preferred Stock of the company at an exercise price of $50.

The board will be entitled to redeem the rights $.001 per right at any time before a person has acquired 15 percent of more off the outstanding common stock.

The company said the plan is not in response to a specific effort to acquire control of the company, but instead is designed to assure the company’s shareholders receive fair and equal treatment should a proposed takeover of the company occur.