Carter's adopts poison pill after RWWM accumulates 16.86% stake

Carter's Inc. (NYSE: CRI) announced its board unanimously adopted a limited-duration stockholder rights agreement following the rapid accumulation of a 16.86% stake by RWWM Inc., according to a company statement.

The children's apparel company said it became aware of RWWM's stock accumulation through a Schedule 13G/A filing with the Securities and Exchange Commission on September 4. Carter's received no advance notice of the accumulation and has been unable to establish communication with RWWM despite attempts to contact the investor.

Under the rights agreement, Carter's will issue one preferred share purchase right for each outstanding common share to stockholders of record on October 3. The rights will initially trade with the common stock and become exercisable if any person or group acquires 15% or more of outstanding shares without board approval, or 20% for certain Schedule 13G filers.

If the ownership threshold is crossed, other shareholders would be entitled to purchase additional Carter's shares at a 50% discount to market price. The board may alternatively exchange each right for one common share. The agreement expires on September 21, 2026.

RWWM's existing 16.86% stake will be grandfathered at current levels, though rights would become exercisable for other shareholders if RWWM increases its position after the announcement.

The board can redeem the rights at $0.0001 per right. Additional details will be filed in a Form 8-K with the SEC on September 24.

Carter's operates more than 1,000 stores in the United States, Canada and Mexico under its Carter's and OshKosh B'gosh brands.

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