The Southwest Gas Holdings Inc. board of directors has adopted a short-term stockholder rights plan to ward off any attempt by activist investor Carl Icahn to take over the gas utility operator and energy infrastructure construction company.

Southwest Gas announced the so-called poison pill on Oct. 11 after Icahn opposed the company's reported deal to buy Questar Pipeline Co. from Dominion Energy Inc. for roughly $2 billion. Southwest Gas announced the deal on Oct. 5.

Icahn said the deal was overpriced and would dilute shareholder value. He argued that Southwest Gas should tackle internal strategic and management problems — which he outlined in the letter — before attempting a large acquisition. On an Oct. 5 conference call, Southwest Gas told investors the purchase would improve the company by boosting cash flow and expanding its regulated business operating gas distribution, transportation and storage assets.

Southwest Gas said it adopted the plan on Oct. 10, citing Icahn's intention to engage in a proxy battle by soliciting proxies from stockholders ahead of the company's 2022 annual investor meeting. The company said the plan would give the board time to understand Icahn's position and encourage him and any other individual attempting a takeover to first negotiate directly with Southwest Gas.

The shareholder rights plan, commonly known as a poison pill, would snap into effect if any individual or group acquires 10% or more of the company's outstanding stock, including through derivatives. At that point, any holder of rights would have the option to purchase share of Southwest Gas common stock at a 50% discount to the market price. Southwest Gas may also opt to exchange each right with a share of common stock.

The right would not apply to the individual or group that triggers the poison pill. The plan would allow any person who owns more than the triggering percentage to retain ownership of the common shares. However, that person would trigger the poison pill if he or she acquires additional shares comprising 0.5% or more of the company's total outstanding stock.