Siebel's poison pill

Software company Siebel Systems said yesterday its board of directors approved a shareholder rights plan, a strategy used by companies to fend off hostile takeovers.

The rights plan gives all Siebel shareholders as of 13 February 2003 the option to buy a new series of preferred stock at a discounted rate in the event of a hostile bid. The plan would take effect if a person or group purchased 15 per cent or more of Siebel's common stock.

The company said it adopted the plan as a preventive measure against abusive takeover tactics and not in response to any particular proposal.

Such plans, also known as poison pills, make an acquisition more costly and time-consuming for the buyer and are typically adopted when management believes the company vulnerable to a takeover because of a drop in its stock price.

Amid a prolonged tech downturn, Siebel's stock has steadily declined over the past year. The company's shares closed at $8.87 on Wednesday, down from a 52-week high of $37.21 last spring.

Siebel, the maker of a top-selling set of business-management applications for streamlining corporate sales and customer service, has reported net losses for the last two quarters and has seen revenue fall for two years.

CEO Tom Siebel recently agreed to cancel 26 million stock options the company had granted him, reducing his stake in the company from 13.5 per cent to 10.7 per cent. The company cancelled the options in response to criticism that its generous granting of stock options has diluted the value of its shares.