Southwest Gas Holdings, Inc. announced that its board of directors (the “Board”) adopted a short-term stockholder rights plan (the “Rights Plan”) on October 10, 2021. The Rights Plan is designed to protect stockholder interests by reducing the likelihood that any person or group would gain control of Southwest Gas Holdings through the open-market accumulation of the Company’s shares without appropriately compensating Southwest Gas Holdings’ stockholders for control.
The adoption of the Rights Plan by the Board is intended to allow the Company to realize the long-term value of the Company’s assets by protecting the Company from actions of third parties that the Board determines are not in the best interest of the Company and its stockholders. Given the importance of maintaining focus on the strength of the Company’s business, the Board believes that adopting the Plan is in the best interests of the Company and its stockholders and will contribute to the preservation of the Company’s long-term value.
In adopting the Rights Plan, the Board noted, in particular, the recent disclosures by Carl Icahn and affiliated individuals and entities on Schedule 14A filed with the U.S. Securities and Exchange Commission on October 5, 2021, of beneficial ownership of shares of the Company’s common stock. This stockholder has also disclosed his intent to solicit proxies from Southwest Gas Holdings’ stockholders in connection with the Company’s 2022 Annual Meeting of Stockholders and to initiate a proxy contest. The Board also took note of the market volatility and the resulting impact on both the Company’s stock price and the potential for this stockholder and others to take increased positions in the Company’s stock.
The Rights Plan will position the Company’s Board of Directors to fulfill its fiduciary duties on behalf of all stockholders by ensuring that the Board has sufficient time to make informed judgments about any attempts to control the Company and will encourage anyone seeking to gain a controlling interest in the Company to negotiate directly with the Board prior to attempting a takeover.
The Rights Plan is not intended to prevent or interfere with any action with respect to the Company that the Board determines to be in the best interests of stockholders. Pursuant to the Rights Plan, the Company is issuing one right for each share of common stock as of the close of business on October 21, 2021. The rights will initially trade with the Company common stock and will become exercisable, subject to the terms of the Rights Plan, only if any person (or any persons acting as a group), at any time after adoption of, and during the term of, the Rights Plan, acquires ownership (including through certain derivative positions and as otherwise provided in the Rights Plan) of 10% or more of the Company’s outstanding common stock, or 20% in the case of certain passive investors (the “triggering percentage”). If the rights become exercisable, all holders of rights (other than any triggering person and any affiliates or associates of such person) will be entitled to acquire shares of Southwest Gas Holdings’ common stock at a 50% discount to the market price at that time or the Company may elect to exchange each right held by such holders for one share of Southwest Gas Holdings’ common stock. Subject to the terms of the Rights Plan, any person who currently owns more than the applicable triggering percentage may continue to own the shares of common stock but may not acquire (including under derivatives, options or similar instruments) additional shares comprising more than 0.5% without triggering the Rights Plan.
The Rights Plan has a 364-day term, expiring on October 9, 2022. The Board may consider an earlier termination, or extension, of the Rights Plan if market and other conditions warrant.
Additional details regarding the Rights Plan will be contained in a Form 8-K to be filed by the Company with the U.S. Securities and Exchange Commission.
About Southwest Gas Holdings, Inc.
Southwest Gas Holdings, Inc., through its subsidiaries, engages in the business of purchasing, distributing and transporting natural gas, and providing comprehensive utility infrastructure services across North America. Southwest Gas Corporation, a wholly owned subsidiary, safely and reliably delivers natural gas to over two million customers in Arizona, California and Nevada. Centuri Group, Inc., a wholly owned subsidiary, is a comprehensive utility infrastructure services enterprise dedicated to delivering a diverse array of solutions to North America’s gas and electric providers.