Shares of Netflix surged last week after billionaire investor Carl Icahn purchased 9.98 percent of the streaming media service, suggesting that it could be a possible buyout candidate by the likes of Amazon.com or Microsoft.
But Netflix isn’t in the mood to sell to just anyone. Today, the company, with 30 million members, announced a new shareholder rights program that’s designed to prevent buyers (like Icahn) from taking over the company. Known in M&A lingo as a “poison pill,” the new rights plan will only be adopted if a person or group acquires a more than 10 percent stake in a transaction not approved by the board.
With a current market value of $4.2 billion, Netflix wouldn’t come cheap. And some have already tossed cold water on the theory that Netflix would make a good acquisition for Amazon, which is building its own streaming video service. (The fact that Netflix CEO Reed Hastings called Amazon’s video offering a “confusing mess” back in September probably doesn’t help win any friends).
Now, Microsoft is a more interesting potential suitor, in part because of Hastings close ties to the software giant. In fact, Hastings just announced last month that he plans to step down from the Microsoft board, a director level position he’s held since March 2007. (Could Hastings’ departure be tied to a possible deal between Netflix and Microsoft?)
“There’s going to be consolidation in this industry, and there are, I would believe, a lot of interested buyers that have a lot more capital than Netflix,” Icahn told The Wall Street Journal. While the takeover specialist didn’t offer any specifics, it’s widely believed that companies such as Amazon, Microsoft and Apple were on this mind. It’s also possible that cable companies could kick the tires on Netflix.
Peter Kafka at All Things D writes that it is hard to “imagine the rationale for any tech company buying Netflix,” since the streaming video service is currently available on nearly every gadget and device. He writes:
And if they did want to buy instead of building, the tech guys would have to decide if they want to make it proprietary. If they did, they would cut out a core part of the Netflix strategy, because the service is currently available to just about every box and device on the market. If they didn’t, they’d be spending money to help boost their competitors’ platforms.