Navistar International Corp. announced it will remove a "poison pill" defense intended to make it prohibitively expensive for a hostile suitor to buy the company.

Shareholders voted to remove the pill, formally called a shareholder rights plan, in a non-binding resolution at Navistar's annual meeting in February, voting 84 percent in favor of repealing the measure. Management, however, had refused to remove the pill, noting in April that the company was in a changing industry at the bottom of a business cycle, with stock prices low relative to long-term prospects.
After continued pressure from stockholders, management changed its mind this month. "Given current conditions in the economy and our industry, continued dialogue with our shareholders about the merits of rights plans is neither productive or relevant to the current challenges facing our company," John Horne, Navistar chairman and CEO, said in a press release.
The pill requires any potential buyer to negotiate with the board. It was enacted in April 1999 amid speculation that the company was a takeover target by rival truck makers. The provision was to be triggered only if a group or person bought or made a tender offer for 15% or more of its shares outstanding. Navistar shareholders would then have the right to acquire additional Navistar common stock at a 50% discount.
In removing the pill, shareholders will automatically be paid 1 cent in cash for each right. There is currently one right attached to each outstanding share of common stock.