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Navistar adopts shareholder rights plan

Updated: July 23, 2012 7:18AM

Navistar International Corp. said Wednesday that its board adopted a stockholder rights plan designed to protect shareholders in the event of a hostile takeover attempt.

Shares of the heavy truck and engine maker tumbled 3 percent in morning trading.

The move comes after MHR Fund Management LLC’s disclosure on Friday that it is now Navistar’s largest shareholder. The hedge fund’s 13.6 percent stake in the Lisle-based company tops that of billionaire investor Carl Icahn, who holds an 11.9 percent stake.

MHR Fund is led by Mark Rachesky, a former Icahn protégé. Last year Rachesky thwarted Icahn’s attempt to take over Lions Gate Entertainment Corp. Icahn boosted his stake in Navistar from 9.8 percent earlier this month.

Italy’s Fiat also said that it might be interested in buying a stake in Navistar so that it can get a slice of the U.S. truck market. And a published report said that Germany’s Volkswagen AG is in the early stages of considering buying a stake in Navistar.

Under the plan announced Wednesday, one preferred stock purchase right will be distributed as a dividend for each share of the company’s common stock held as of June 29. Each right will entitle stockholders to buy a unit representing one one-thousandth of a share of a new series of preferred stock for $140.

Those rights would be exercisable if a person or group acquires 15 percent or more of the company’s common stock, or begins a tender or exchange offer that would result in them owning an at least 15 percent stake, Navistar said. The rights could be exercised to create additional common shares that would make an unwanted takeover bid much more expensive.

The rights will expire on June 18, 2013.

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