ShmoopTube

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finance a la shmoop what is a rights offering all right people think a right

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to buy and buy at a discount kind of companies may be fearful of a hostile [Woman pointing at woman behind reception desk]

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takeover or some other big bad event that harms them and they want to give

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existing shareholders preferential treatment over external non shareholders [Shareholders at a night club]

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this rights offering is essentially a hostile takeover defense so they might [Bear attacking rights offering]

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say ok pals for the next 60 days you have the right to buy an additional

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share of our stock which is currently trading for 312 dollars each for $200 a [Man discussing company stock at presentation]

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share and note the discount wink wink and you need to currently own 5 shares

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for every one that you'll then buy sound like a plan well that is the company is [Man throws rights offering to woman]

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offering those rights to buy at a discount and the shareholders can sell

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those rights to other non shareholders for cash in essence is kind of a funky

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one-time dividend that actually hurts both the would be external hostile [Metal anvil land on a bear]

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takeover people but unfortunately also hurts the employees who have stock

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options not actual shares so then they suffer the dilution of this rights [Anvil lands on employees]

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offering with nothing to show for it yeah and you may ask is there such a

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thing as a hostile take under mmm wondering about that [People protesting outside metal fence]

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