BKF Capital Group Inc. announced Monday it has withdrawn its offer to acquire a majority stake in Qualstar Corp. in response to the Simi Valley company adopting a poison pill provision to prevent such a takeover.
BKF of Boca Raton, Fla., is the second largest shareholder in Qualstar, a manufacturer of data tape storage and power supply products. This is the second time BKF and its chief executive, Steve Bronson, has attempted a takeover of the company.
BKF said it would no longer pursue purchasing 3 million shares of Qualstar at a cost of $1.65 per share because the adoption of the poison pill, or shareholder right’s plan, on Feb. 6 would make it impossible to consummate the offer.
The plan would take effect if an individual or group buys 10 percent or more of the common stock in Qualstar. The plan would both create a second, preferred class of stock and flood the market with additional common shares, diluting individual stakes.
Bronson expressed disappointment in the Qualstar board adopting the shareholder right’s plan and said that it shows a continuing pattern of disregard toward investors. BKF’s next step is putting up its own board slate at the next Qualstar annual meeting, Bronson said.
“We believe that the board has adopted the rights plan to entrench itself and management, and that shareholders should take account of this when it comes time to vote at the annual meeting,” Bronson said in a prepared statement.
Last June, Bronson put up a proxy battle to gain control of the Qualstar board but did not receive enough votes for his slate of candidates.
Bronson has been critical of Qualstar management and its continued investment in the data tape storage business, which Bronson believes the company should sell.
Qualstar did not issue a response to the withdrawal.