Report Prompts Safeguard Health to Get ‘Poison Pill’

Safeguard Health Enterprises Inc. adopted a “poison pill” measure Friday to thwart any unwanted takeover attempt.

The dental health maintenance company took that step three days after an analyst said the stock is undervalued. The stock closed at $15.75 Friday, down 12.5 cents, in trading on the Nasdaq market.

The company said that the measure isn’t in response to any particular takeover attempt.

Ronald Bendzel, Safeguard’s senior vice president, noted there has been a wave of consolidations sweeping the health-care industry.

“We are concerned that if somebody tries to gain control of the company that they would have to negotiate fairly with the board,” he said. “Whenever you are undervalued, you are always vulnerable to a takeover.”

He cited a report earlier this week by Katherine E. Sharadin, an analyst at Cruttenden Roth, that notes that the stock is priced nearly half of firms with comparable per-share earnings. The company last year earned $2.4 million, or 50 cents a share, on revenue of $81.6 million.

The report also noted other items that might attract a suitor. The company has more than $16 million in cash on its balance sheet and no long-term debt.

The company’s measure provides for stockholders to receive rights to purchase shares at a 50% discount if an investor purchases at least 15% of the company’s common shares. A potential suitor wishing to redeem those rights would have to pay $75 apiece.

Sharadin couldn’t be reached for comment.