BRIDGEWATER, N.J. (AP) -- Alpharma Inc. on Tuesday adopted a shareholders rights plan to head off a hostile takeover bid by King Pharmaceuticals.
A shareholder rights plan, commonly known as a "poison pill," generally makes a takeover more difficult for the buyer.
In August, Alpharma's board rejected a $1.4 billion offer from King, saying it undervalued the company. Last week King filed a notice with federal regulators announcing its intention to buy a majority of Alpharma's shares.
Alpharma's Chief Executive Dean Mitchell said the company was adopting the shareholders plan "in light of King's unsolicited and aggressive actions."
Under Alpharma's plan, it would become prohibitively expensive for King or any other investor to buy more than 15 percent of the company's shares.
Mitchell said the plan would not "prevent a takeover of the company on terms that are fair."
Shares of Alpharma Inc. rose 6 cents Tuesday to $35.75, while Bristol, Tenn.-based King Pharmaceuticals shares rose 23 cents to $11.67.