Fortrea Adopts Limited-Duration Stockholder Rights Plan

Rhea-AI Summary

Fortrea (FTRE) has announced the adoption of a limited-duration stockholder rights plan ("poison pill") effective immediately until June 10, 2026. The plan was implemented in response to significant stock price volatility and third-party interest in accumulating shares. Under the plan, stockholders will receive one right per common share as of June 23, 2025. These rights become exercisable if any entity acquires 10% or more of Fortrea's outstanding common stock. When triggered, rights holders can purchase company shares at a 50% discount, excluding the triggering entity. The plan aims to protect stockholder interests, ensure fair treatment in potential takeover situations, and give the Board sufficient time to evaluate any acquisition proposals. Barclays is serving as strategic advisor and Smith Anderson as legal advisor to Fortrea.

Positive

• Rights Plan provides stockholders protection against potential unfair takeover attempts
• Plan allows Board sufficient time to evaluate and respond to acquisition proposals
• Stockholders can purchase shares at 50% discount if rights are triggered
• Board maintains flexibility to redeem rights or accept favorable acquisition offers

Negative

• Implementation suggests company may be vulnerable to hostile takeover attempts
• Rights Plan could potentially deter legitimate acquisition offers
• Significant stock price volatility indicated by the company
• Plan may limit stockholders' ability to benefit from certain market opportunities

Insights

Corporate Governance Specialist

Fortrea adopts defensive poison pill against potential takeover threats amid stock volatility and third-party interest in accumulating shares.

Fortrea has implemented a limited-duration stockholder rights plan (commonly known as a "poison pill") effective immediately until June 10, 2026. This defensive measure triggers if any entity acquires 10% or more of outstanding common stock, allowing other shareholders to purchase additional shares at a 50% discount, significantly diluting the potential acquirer's position.

This rights plan was adopted in response to two key factors: significant stock price volatility and third-party interest in accumulating shares to capitalize on this dislocation. The timing suggests the board believes Fortrea's shares are currently undervalued and may be vulnerable to opportunistic acquisition attempts that don't reflect the company's long-term value potential.

The plan includes several standard features designed to balance defensive protection with flexibility. The board retains redemption rights at $0.001 per right, and the plan lacks "dead-hand" provisions that would limit future boards from removing it. This structure allows Fortrea to consider legitimate acquisition offers while deterring coercive or inadequate takeover attempts.

This defensive measure indicates Fortrea may have received unwanted acquisition interest or detected suspicious accumulation patterns in its trading volume. With the assistance of Barclays as strategic advisor, the board appears to be buying time to either pursue strategic alternatives or execute its standalone growth strategy without the pressure of responding to a hostile bid that might undervalue the company.

Board Committed to Protecting Long-Term Value for All Stockholders

DURHAM, N.C., June 12, 2025 (GLOBE NEWSWIRE) -- Fortrea (Nasdaq: FTRE) (the “Company”), a leading global contract research organization (CRO), today announced that its Board of Directors (the “Board”) has unanimously adopted a limited-duration stockholder rights plan (“Rights Plan”) to protect the best interests of all Fortrea stockholders. The Rights Plan is effective immediately and will expire on June 10, 2026, unless terminated earlier by the Board.

The Rights Plan is intended to enable the Company’s stockholders to realize the long-term value of their investment, ensure that all stockholders receive fair and equal treatment in the event of any proposed takeover of the Company, and to guard against tactics to gain control of the Company without paying all stockholders an appropriate premium for that control. The Rights Plan is also intended to guard against tactics that might prevent the Board from having sufficient time to make informed judgments and take actions that are in the best interests of the Company and its stockholders. The Rights Plan was adopted in response to the significant and ongoing dislocation in the trading price of the Company’s common stock and recent interest by third parties to capitalize on such dislocation, which may include accumulations of the Company’s common stock.

The Rights Plan applies equally to all current and future stockholders and is not intended to deter offers or preclude the Board from considering offers, engaging in discussions or pursuing transactions that it believes are in the best interests of all stockholders. The Rights Plan will encourage anyone seeking to acquire the Company or gain a significant interest in the Company to engage directly with the Board.

The Rights Plan is similar to plans adopted by other publicly traded companies. Pursuant to the Rights Plan, Fortrea is issuing one right (“Right”) for each share of common stock as of the close of business on June 23, 2025. The Rights will initially trade with Fortrea common stock and will generally become exercisable only if any person (or any persons acting as a group) acquires 10% or more of the Company’s outstanding common stock (the “triggering percentage”). If the rights become exercisable, all holders of rights (other than any triggering person) will be entitled to acquire shares of common stock at a 50% discount, or the Company may exchange each right held by such holders for one share of common stock. Under the Rights Plan, any person who currently owns more than the triggering percentage may continue to own its shares of common stock but may not acquire any additional shares without triggering the Rights Plan. Except as provided in the Rights Plan, the Board is entitled to redeem the rights at $0.001 per right. The Rights Plan does not contain any dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future Board to redeem the rights.

Further details about the Rights Plan will be contained in a Form 8-K to be filed by Fortrea with the Securities and Exchange Commission (the “SEC”).

Barclays is serving as strategic advisor and Smith Anderson is acting as legal advisor to Fortrea.

About Fortrea

Fortrea (Nasdaq: FTRE) is a leading global provider of clinical development solutions to the life sciences industry. We partner with emerging and large biopharmaceutical, biotechnology, medical device and diagnostic companies to drive healthcare innovation that accelerates life changing therapies to patients. Fortrea provides phase I-IV clinical trial management, clinical pharmacology and consulting services. Fortrea’s solutions leverage three decades of experience spanning more than 20 therapeutic areas, a passion for scientific rigor, exceptional insights and a strong investigator site network. Our talented and diverse team working in about 100 countries is scaled to deliver focused and agile solutions to customers globally. Learn more about how Fortrea is becoming a transformative force from pipeline to patient at Fortrea.com and follow us on LinkedIn and X (formerly Twitter).

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, including, without limitation, statements relating to the effects and intended benefits of the Rights Plan. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “guidance,” “expect,” “assume,” “anticipate,” “intend,” “plan,” “forecast,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words that are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results could differ materially from these forward-looking statements due to a number of factors, including, but not limited to factors described from time to time in documents that the Company files with the SEC. For a further discussion of the risks relating to the Company’s business, see the “Risk Factors” Section of the Company’s Annual Report on Form 10-K, as filed with the SEC, as such risk factors may be amended or updated from time to time in the Company’s subsequent periodic and other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included or incorporated by reference in the Company’s filings with the SEC. All forward-looking statements are made only as of the date of this release, and the Company does not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect future events or developments.

Fortrea Contacts:

Hima Inguva (Investors) – 877-495-0816, hima.inguva@fortrea.com
Sue Zaranek (Media) – 919-943-5422, media@fortrea.com
Kate Dillon (Media) – 646-818-9115, kdillon@prosek.com

FAQ

What is the purpose of Fortrea's (FTRE) stockholder rights plan?

The plan aims to protect stockholders from unfair takeover attempts, ensure equal treatment in acquisition scenarios, and give the Board time to evaluate proposals properly.

When does Fortrea's (FTRE) rights plan expire?

The Rights Plan expires on June 10, 2026, unless terminated earlier by the Board.

What triggers Fortrea's (FTRE) stockholder rights plan?

The plan is triggered if any person or group acquires 10% or more of Fortrea's outstanding common stock.

What happens when Fortrea's (FTRE) rights plan is triggered?

Rights holders can purchase company shares at a 50% discount, except for the triggering entity, or the company may exchange each right for one share of common stock.

What is the record date for Fortrea's (FTRE) rights distribution?

Fortrea will issue one right per share of common stock as of the close of business on June 23, 2025.