Ford Limits Ownership Changes to Preserve $19 Billion in Tax Credits

Sept. 11, 2009
While the plan should prevent a hostile takeover, it does not preclude the possibility of a merger.

The company declared a new dividend which would automatically dilute the ownership interests of any person or group which acquires 4.99% or more of Ford's common stock by issuing preferred shares.

"This plan is designed to protect shareholder value and safeguard valuable tax attributes by reducing the likelihood of an unintended 'ownership change' through actions involving Ford common stock," said Lewis Booth, Ford's chief financial officer.

Ford said its ability to offset taxable income would be limited under the tax code should Ford's "five percent shareholders" collectively increase their ownership by more than 50 percentage points over a rolling three year period.

While the plan should prevent a hostile takeover, it does not preclude the possibility of a merger.

Ford's board of directors retains the right to terminate the plan at any point or exempt any acquisition of common stock from the provisions of the plan.

"The plan is similar to tax benefit preservation plans adopted by many other public companies with significant tax attributes," Ford said.

Mutual fund companies are exempt from the rules as long as no single fund owns five percent or more of Ford's stock.

Copyright Agence France-Presse, 2009

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