Tracinda Corp. is weighing alternatives to its cash tender offer for Tesoro Corp., after determining a rights plan Tesoro adopted last week would have an adverse effect on the value of Tesoro’s stock and shareholders, the Wall Street Journal reports.

Earlier this month, billionaire Kirk Kerkorian’s Tracinda filed a tender offer to buy 21.9 million shares of Tesoro for $64 each. If the transaction is completed, Mr. Kerkorian would own slightly less than 20% of the San Antonio oil refiner.

Tesoro last week said it won’t take a stand on whether shareholders should participate in the tender offer by Tracinda, but at the same time announced its adoption of the rights plan.

Shareholder-rights plans, known as poison pills, are intended to ward off unsolicited takeovers through the issuance of huge amounts of stock. Tesoro’s plan would kick in when an investor acquires a 20% stake in the company. If Tracinda’s tender offer were successful, its stake would fall just below that threshold.

Tracinda said Monday that Tesoro’s adoption of a rights plan results in failure of a condition to Tracinda’s tender offer. The plan, Tracinda said, has a potential dilutive effect on Tesoro stock, and negatively impacts all Tesoro stockholders, including Tracinda, by limiting opportunities to enhance stockholder value and restricting the ability of Tesoro stockholders to freely vote or sell their shares.

Read the full Wall Street Journal story

.(subscription required)