Carvana Co. has adopted a shareholder rights agreement to limit shareholders from acquiring a controlling stake in the company and protect its ability to roll over net operating losses to offset future tax liability.
The Tempe-based e-commerce auto retailer announced Tuesday its board of directors approved the shareholder rights agreement — commonly referred to as a poison pill — that is intended to reduce the likelihood of a new owner acquiring more than 4.9% of the company’s stock.
Carvana (Nasdaq: CVNA) said it believes that adopting a shareholder rights plan is in the best interest of the company, given the potential value of its significant federal net operating loss carry-forwards available to offset future tax bills, according to a company announcement.
A net operating loss carry-forward is a tax provision that allows companies to deduct losses in one year from future years’ profits to reduce taxable income.
