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EarthLink moves to avert hostile takeover

With shares trading at their lowest level in more than four years, EarthLink today approved a plan to repurchase up to US$25 million of its own stock, the Associated Press reports. Additionally, the company approved a shareholder rights plan than entitles shareholders to purchase shares at 50 percent off its current value should a third-party buy or make an offer for 15 percent or more of EarthLink’s shares. Such a move dilutes a company’s shares, making it less appealing to takeover. “We definitely feel that we are undervalued,” EarthLink spokesman Dan Greenfield said. Apple owns a substantial stake in EarthLink and announced last quarter that it might have to write down its investment as a loss if the decline in EarthLink’s value is deemed less than temporary. Apple invested $200 million in EarthLink at about $30 per share in early 2000. Shares of EarthLink today are trading at $5.10.

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