With its stock near a 52-week low, EarthLink Inc. said it has adopted a "poison-pill" defense plan to discourage hostile takeover bids. The Atlanta-based Internet service provider also plans to spend as much as $25 million to repurchase company shares.
EarthLink shares rose 84 cents, or 17.8%, to $5.56 on Nasdaq. Shares hit an intra-day 52-week low of $4.40 on July 26. EarthLink shares are down more than 60% this year.
"We definitely feel that we are undervalued," spokesman Dan Greenfield said.
Under the shareholder rights plan, EarthLink will issue a dividend of one right for each outstanding common share that was owned by the close of business Monday.
Those rights become exercisable if a third party buys or makes an offer for 15% or more of EarthLink's common stock. At that point, EarthLink shareholders would be granted the right to buy shares of EarthLink common stock at 50% off the current market price.