The plan includes what’s known as a “poison pill” which would automatically be triggered if someone buys more than 4.9% of the company’s stock on the open market. It comes as former chief executive Lew Dickey’s newly created Modern Media has amassed a $207 million war chest seeking acquisition targets.
Once activated, Cumulus’ poison pill would award shareholders with incremental shares of stock or give them the option to buy shares at a significant discount if the company becomes a takeover target. Either action would effectively dilute the acquirer’s position to 50% or less of what they’ve acquired.
Dickey may be the founder of Cumulus, but there's a good reason he was forced out. Many people believe he is the biggest reason the company stock is now less than a dollar a share.