(Reuters) - Activist hedge fund Starboard Value LP sent an open letter to the board of Mercury Systems (NASDAQ:MRCY) on Thursday asking the defense technology firm to eliminate the shareholders rights plan it recently adopted.
A shareholder rights plan, popularly known as a "poison pill", is a defensive strategy to avert hostile takeovers. The plan, usually triggered when a party buys a certain percentage of a firm, lets existing investors purchase more shares at a discount.
Starboard owns about 7.33% of Mercury and has asked the company to raise the ownership threshold which triggers the rights plan to 15% from the current 7.5%, if it cannot fully remove the rights plan.
"We believe the rights plan is not in the best interests of the company's shareholders," Starboard said in its letter.
Mercury did not immediately respond to a Reuters request for comment.
On Dec. 28, Mercury Systems had adopted a shareholder rights plan with a one-year duration.
Separately, activist investor Jana Partners said last month that it would push Mercury to consider options for its business, including a potential sale.