Pliant Therapeutics Adopts Limited Duration Stockholder Rights Agreement

Rhea-AI Summary

Pliant Therapeutics (PLRX) has announced the adoption of a duration stockholder rights agreement ('poison pill') by its Board of Directors, effective until March 11, 2026. The measure comes in response to recent stock accumulations and aims to prevent unauthorized control through market purchases.

Under the agreement, stockholders of record by March 25, 2025, will receive one preferred share purchase right per common stock share. These rights activate if an entity acquires 10% ownership (20% for Schedule 13G investors) without Board approval. In such cases, existing stockholders can purchase additional PLRX shares at a 50% discount. Similar provisions apply if Pliant is acquired in a merger after such unauthorized accumulation.

The Board retains the right to redeem these rights at $0.001 per right or exchange them at one common share per right. Existing stockholders above threshold levels will be grandfathered, unless they increase their holdings after the announcement.

Positive

• Implementation of shareholder protection mechanism against hostile takeovers
• Existing large stakeholders are grandfathered, preventing immediate disruption
• Board maintains control over rights redemption and exchange options

Negative

• Defensive measure suggests company may be under takeover pressure
• Rights plan could potentially limit stock price appreciation from acquisition premium
• May discourage legitimate strategic investors from building significant positions

Insights

Corporate Governance Expert

Pliant Therapeutics has implemented a duration stockholder rights agreement (commonly known as a "poison pill") in response to recent undisclosed accumulations of company stock. This defensive measure will remain in effect until March 11, 2026, or potentially earlier as specified in the agreement.

The mechanics are significant: if any entity acquires 10% of outstanding shares (or 20% for certain Schedule 13G investors) without board approval, other shareholders can purchase additional shares at a 50% discount. This would substantially dilute the would-be acquirer's stake, making hostile takeovers prohibitively expensive.

This rights plan includes important governance safeguards: it's temporary rather than permanent, contains exemptions for passive institutional investors, and includes grandfathering provisions for existing large shareholders. The board maintains redemption rights at $0.001 per right, giving them flexibility should circumstances change.

The implementation signals the board has detected specific acquisition interest they believe warrants a defensive posture. However, the one-year duration suggests this is a tactical move designed to ensure the board maintains negotiating leverage rather than an entrenchment strategy. This balanced approach protects shareholders from potentially opportunistic accumulations while preserving the possibility of value-creating transactions at appropriate premiums.

Financial Analyst

Pliant's adoption of this rights agreement has immediate implications for its ownership dynamics and takeover vulnerability. While the company hasn't disclosed which specific investor(s) prompted this defensive measure, the board clearly perceived sufficient accumulation activity to warrant protection against creeping control acquisitions.

The financial mechanics are particularly noteworthy. The 50% discount provided to non-acquiring shareholders effectively creates a significant economic penalty for crossing ownership thresholds without board approval. This differential treatment mechanism ensures any successful acquisition would require either board endorsement or payment of a substantial control premium to all shareholders.

Importantly, the thresholds are calibrated differently for different investor types - 10% for most investors but 20% for qualified passive institutional investors filing Schedule 13G. This nuanced approach recognizes that not all large positions represent control threats, particularly from index funds or passive institutional investors.

The exchange provision giving the board option to swap each right for one share of common stock provides additional flexibility beyond the typical exercise mechanism. For investors, this signals the board is focused on maintaining negotiating leverage rather than absolutely preventing acquisitions, which should moderate any potential negative market reaction to what might otherwise be perceived as an entrenchment tactic.

SOUTH SAN FRANCISCO, Calif., March 13, 2025 (GLOBE NEWSWIRE) -- Pliant Therapeutics, Inc. (Nasdaq: PLRX) today announced that its Board of Directors has unanimously adopted a limited duration stockholder rights agreement (the “Rights Agreement”) to protect stockholder interests.

The Board resolved to adopt the Rights Agreement in response to recent accumulations of the Company’s common stock. The Rights Agreement is intended to reduce the likelihood that any entity, person or group is able to gain control of Pliant through open market accumulation without paying all stockholders an appropriate control premium or providing the Board sufficient opportunity to make informed judgments and take actions that are in the best interests of all stockholders.

Pursuant to the Rights Plan, Pliant will issue, by means of a dividend, one preferred share purchase right for each outstanding share of Pliant common stock to stockholders of record on the close of business on March 25, 2025. Initially, these rights will not be exercisable and will trade with, and be represented by, the shares of Pliant common stock.

The Rights Agreement will expire on March 11, 2026, or earlier, as provided in the Rights Agreement.

The terms of the Rights Agreement are consistent with other rights plans adopted by publicly-held companies. Under the Rights Agreement, the rights generally become exercisable if a person or a group of persons (each, an “acquiring person”) acquires beneficial ownership of 10% (or 20% in the case of certain investors filing on Schedule 13G) or more of the outstanding shares of Pliant common stock in a transaction not approved by the Board. In that situation, each holder of a right (other than the acquiring person, whose rights will become void and will not be exercisable) will be entitled to purchase, at the then-current exercise price, additional shares of Pliant common stock at a 50% discount. In addition, if Pliant is acquired in a merger or other business combination after an unapproved party acquires 10% (or 20% in the case of certain investors filing on Schedule 13G) or more of the outstanding shares of Pliant common stock, each holder of a right would then be entitled to purchase, at the then-current exercise price, shares of the acquiring company’s stock at a 50% discount. The Board, at its option, may exchange each right (other than rights owned by the acquiring person that have become void) in whole or in part, at an exchange ratio of one share of Pliant common stock per outstanding right, subject to adjustment. Except as provided in the Rights Agreement, the Board is entitled to redeem the rights at $0.001 per right.

If a person or group beneficially owns 10% (or 20% in the case of certain investors filing on Schedule 13G) or more of the outstanding shares of Pliant common stock prior to Pliant’s announcement of its adoption of the Rights Agreement, then that person’s or group’s existing ownership percentage will be grandfathered (except that, with certain exceptions, if at any time after the announcement of the adoption of the Rights Agreement such person or group increases its ownership of Pliant common stock, such person’s or group’s ownership percentage will no longer be considered grandfathered).

Additional information regarding the Rights Agreement will be contained in a current report on Form 8-K to be filed by Pliant with the U.S. Securities and Exchange Commission.

Sidley Austin LLP is acting as legal counsel to Pliant.

About Pliant Therapeutics, Inc.

Pliant Therapeutics is a late-stage biopharmaceutical company and leader in the discovery and development of novel therapeutics for the treatment of fibrotic diseases. Pliant's lead product candidate, bexotegrast (PLN-74809), is an oral, small molecule, dual selective inhibitor of α_vß6 and α_vß₁ integrins that is in development in the lead indication for the treatment of idiopathic pulmonary fibrosis, or IPF. Bexotegrast has received Fast Track Designation and Orphan Drug Designation from the U.S. Food and Drug Administration (FDA) and Orphan Drug Designation from the European Medicines Agency in IPF. Pliant is conducting a Phase 1 study of PLN-101095, a small molecule, dual-selective inhibitor of α_vß₈ and α_vß₁ integrins, that is being developed for the treatment of solid tumors. In addition, Pliant has received regulatory clearance for the conduct of a Phase 1 study of PLN-101325, a monoclonal antibody agonist of integrin α₇β₁ targeting muscular dystrophies.

Investor and Media Contact:

Christopher Keenan
Vice President, Investor Relations and Corporate Communications
Pliant Therapeutics, Inc.
ir@pliantrx.com

FAQ

What is the purpose of PLRX's new stockholder rights agreement?

To prevent unauthorized control through market accumulation without paying appropriate control premium to all stockholders and ensure Board oversight of significant ownership changes.

When will PLRX's stockholder rights agreement expire?

The agreement will expire on March 11, 2026, unless terminated earlier as provided in the Rights Agreement.

What ownership percentage triggers PLRX's stockholder rights?

Rights activate at 10% ownership for most investors, or 20% for certain investors filing Schedule 13G.

What benefits do PLRX shareholders receive under the rights agreement?

Shareholders can purchase additional shares at a 50% discount if an unauthorized party acquires beyond threshold ownership levels.

When will PLRX distribute the preferred share purchase rights?

Rights will be distributed as a dividend to stockholders of record at the close of business on March 25, 2025.