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Cubic, Rising as Elliott Takes Stake, Adopts Poison Pill

Cubic Corp. adopted a poison pill after hedge fund Elliott Management acquired a 15% stake and said it planned to buy the rest.
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Shares of Cubic Corp.  (CUB) - Get Cubic Corporation Report jumped on Monday after the company said it had adopted a poison pill in response to a takeover approach by hedge fund Elliott Management. 

Cubic said Elliott informed the San Diego transport- and defense-systems company that the fund owns a 15% stake and, together with a private-equity partner, was interested in acquiring the rest.

Cubic for its part says it has not initiated a process to sell the company, and its board believes its stand-alone prospects are "excellent."

At last check Cubic shares were up 27% at $56.54. They traded at a 52-week high above $75, set last November and a 52-week low near $31 in late March.

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A poison pill, also known as a shareholder-rights plan, is designed to make a hostile takeover prohibitively expensive. 

"The adoption of the Rights Plan is intended to provide the Board with time to make informed decisions and prevent any third party from obtaining control of Cubic in a manner and at a price that are not in the best interests of Cubic’s shareholders," said David Melcher, lead independent director of Cubic, in a statement. 

Elliott released a statement in which Partner Jesse Cohn and Portfolio Manager Marc Steinberg confirmed that the firm took the stake in Cubic.

"While we are disappointed with the board's decision to impose a shareholder rights plan," the statement said, "we are pleased that the board has acknowledged its fiduciary duty to engage in good faith in pursuit of the value-maximizing outcome for Cubic and our fellow shareholders. We are fully prepared to acquire Cubic and look forward to immediate engagement with the company."

Elliott Management, run by Paul Singer, is traditionally known as an activist investment firm, but in recent years has expanded its private equity activity, Bloomberg reported. Earlier this month, Elliott said that it was in advanced talks to buy Swiss baking company Aryzta, the maker of Otis Spunkmeyer cookies