HomeIndustriesSouthwest Airlines Adopts “Poison Pill” Strategy to Discourage Activist Investor Takeover

Southwest Airlines Adopts “Poison Pill” Strategy to Discourage Activist Investor Takeover

Southwest Airlines is taking the “poison pill” strategy in an attempt to discourage activist investor Elliott Investment Management from increasing its stake in the airliner and continuing to push for leadership changes at the company.

In early June, Elliott unveiled that it owns an 11% stake, equaling around $2 billion, in Southwest Airlines. At the time, the activist investor sent a letter to the company’s board in which they criticized disappointing financial performances and questioned the work done by CEO Robert Jordan. They also concluded that Southwest would benefit from leadership change.

Jordan recently publicly stated that he doesn’t intend to step down from his position while Southwest’s board gave him support by adopting a “poison pill.” It will kick in if a single shareholder acquires more than a 12.5% stake in the company and allows all other Southwest Airlines shareholders to buy the stock at a discount of 50%.

“Southwest Airlines has made a good faith effort to engage constructively with Elliott Investment Management since its initial investment and remains open to any ideas for lasting value creation,” Southwest Executive Chair Gary Kelly said in a statement shared on Wednesday.

Southwest’s stock saw a slight uptick by 1% on Wednesday, closing at $28.58 per share. The company’s shares are near the flatline year-to-date.

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