FXCM Inc Extends Shareholder Rights Plan, Introduces Amendments

FXCM extends a second line of defense against a potential takeover after adopting a "poison pill" last year.

FXCM Inc (NYSE:FXCM) has announced that it is introducing amendments to its existing shareholder rights plan that was adopted in the aftermath of the Swiss National Bank (SNB) induced crisis for the brokerage.

At the time, the company introduced a “poison pill” rights plan with a 10 per cent trigger. In essence the market would have been flooded with new shares every time a shareholder crosses the 10 per cent barrier of share ownership.

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The amendments that FXCM Inc is introducing include measures to protect the interests of the brokerage and its investors in the company’s shares by helping preserve the value of the company’s net operating loss carryforwards and tax credits.

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In addition the new rights plan is continuing the “poison pill” strategy which the firm adopted last year. FXCM Inc explicitly stated in the announcement that as of the time of the announcement, it hasn’t become a takeover target. The new plan will protect the company’s shareholders from any proposed takeover of the company, and will serve as a barrier for two-tier or partial tender offers or open market accumulations of shares.

According to the amendment, shareholders of the company will be entitled to purchase one one-thousandth of the preferred shares of the firm at an initial exercise price of $44.12. The rights will become actionable every time a person or a group of investors surpass ownership of 4.9 per cent of the outstanding common shares of FXCM Inc.

Before the announcement the trigger was set at 10 per cent of the voting shares, and that threshold will remain in place as a second line of defense.

The new rules do not apply to existing shareholders of the brokerage. The updated rights plan is set to expire on January 26, 2019.

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