Cleveland Cliffs Inc, which will officially be renamed Cliffs Natural Resources, has announced that its directors have adopted a shareholder rights plan. The plan is intended to protect the company and its shareholders from potentially coercive takeover practices or takeover bids that are inconsistent with the interests of the company and its shareholders. The plan is not intended to deter offers that are fair and otherwise in the best interests of all of the company’s shareholders. The adoption of a shareholder rights plan is a well-accepted approach to ensuring that all shareholders receive a fair price and are treated equally in the event of a takeover.

Under the plan, the rights will initially trade together with the company’s common shares and will not be exercisable. In the absence of further action by the company’s directors, the rights generally will become exercisable and allow the holder to acquire the company’s common shares at a discounted price if a person or group were to acquire beneficial ownership of 10% or more of the company’s outstanding common shares, or, in the case of a person or group that currently beneficially owns 10% or more of the company’s outstanding common shares, that person or group acquires beneficial ownership of any additional common shares of the company. Rights held by persons that exceed the applicable threshold will be void.

The term beneficial ownership is defined in the rights plan and includes, among other things, certain derivative or synthetic arrangements having characteristics of a long position in the Company’s common shares.