Pharmacy chain Fred’s Inc. (NASDAQ: FRED) on Tuesday announced that the company’s board of directors had adopted a shareholders’ rights plan “to ensure that the Board remains in the best position to perform its fiduciary duties and enable all Fred’s Pharmacy shareholders to receive fair and equal treatment.” Naturally, some shareholders are more equal than others.

Hedge fund Alden Global Capital has quietly put together a stake of about 25% in Fred’s, according to a report last week at The Wall Street Journal. Alden made a bundle after Fred’s announced that it would purchase 865 stores from Rite Aid Inc. (NYSE: RAD) that the larger chain needs to sell in order to go ahead with its proposed merger with Walgreens Boots Alliance Inc. (NASDAQ: WBA).

In keeping with the shareholders’ rights plan it has adopted, Fred’s plans to issue one right for each outstanding share of common stock outstanding on January 5, 2017. The rights expire June 26, 2019, and Fred’s may redeem the rights at any time before they become exercisable at $0.01 per right.

Here’s the plan:

[T]he rights will generally become exercisable only if a person or group acquires beneficial ownership of 10% or more of the Company’s common stock. In that situation, each holder of a right (other than such acquiring person or group, whose rights will become void and will not be exercisable) will be entitled to purchase, at the then-current exercise price, additional shares of common stock having a market value of twice the exercise price of the right. Any existing shareholder or group that has beneficial ownership of 10% or more of the Company’s common stock will be grandfathered at its current ownership level, but the rights will become exercisable if at any time after the announcement of the Rights Plan such shareholder or group increases its ownership of the common stock.

At any time after any person or group acquires beneficial ownership of 10% or more of the Company’s Class A common stock, the Board, at its option, may exchange each right (other than rights owned by such acquiring person or group which will have become void) in whole or in part, at an exchange ratio of one share of Class A common stock per outstanding right (subject to adjustment).

The Wall Street Journal reported that a source said that Alden supports the acquisition and plans to talk with Fred’s about issues such as capital allocation and, of course, board representation.

Fred’s stock has soared more than 80% since last Tuesday’s announcement of the deal with Rite Aid. Shares closed at $20.20 last Friday, in a 52-week range of $7.89 to $21.77. Shares traded down about 0.3% in this morning’s premarket at $20.15. The stock’s 12-month consensus price target is $18.40.

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