www.baltimoresun.com/business/bs-bz-medifast-poison-pill-20140829,0,3288375.story

baltimoresun.com

Medifast adopts 'poison pill' plan to prevent takeover

Waltham, Mass., company has bought nearly 10 percent of shares

By Lorraine Mirabella, The Baltimore Sun

12:07 PM EDT, August 29, 2014

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Owings Mills-based Medifast has adopted a stockholder rights plan in an attempt to prevent a hostile takeover of the weight loss plan company.

Medifast said Thursday its board of directors adopted the one-year plan, a so-called "poison pill," "in response to the recent rapid accumulations of significant portions of Medifast's outstanding common stock" and "to guard against any attempt to gain control of Medifast without paying all stockholders a premium for that control."

A Massachusetts-based supply chain and logistics company, ModusLink Securities Corp., has bought nearly 10 percent of Medifast's shares since late July in transactions worth $35.4 million.

Medifast's plan, which issues one preferred stock purchase right for each outstanding share of Medifast common stock through Sept. 9, was not a response to a specific takeover bid or proposal, the company said.

The purchase rights become exercisable only if a person or group acquires ownership of 10 percent -- or 20 percent for institutional investors -- of Medifast without the board's approval, making it more difficult for an investor to gain control.

lorraine.mirabella@baltsun.com