Twitter counters Elon Musk’s hostile takeover bid with ‘poison pill’ strategy
The aggressive move is designed to block Musk from building a greater than 15% stake in the open market, and potentially curbing his total buyout of the social media platform.
In response to Elon Musk’s bid to own Twitter, the company’s board of directors launched a “poison pill” takeover defense late Thursday to potentially thwart the hostile takeover.
In a sign of things to come, the social media platform said on Friday that its board of directors unanimously adopted a year-long shareholder rights plan to “enable all shareholders to realize the full value of their investment in Twitter.”
The plan is designed to “reduce the likelihood that any entity, person, or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium.”
The aggressive move is designed to block Musk from building a greater than 15% stake in the open market, and potentially curbing his total buyout of the social media platform.
According to the plan, the shareholder rights become exercisable if any entity, i.e. Elon Musk, acquires a beneficial ownership of more than 15% or more of the company’s common stock in an unapproved transaction by the board. In doing so, shareholders will then have the right to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.
One of the provisions states that “"the person, entity, or group triggering the rights plan" will not be able to exercise these rights. The plan expires on April 14, 2023.
According to the company, the right plan will not prevent its board of directors “from engaging with parties or accepting an acquisition proposal” if they believe doing so would be in the best interests of the company.
As detailed by Rebel News earlier this week, Musk offered $54.20 a share in cash for Twitter, valuing the platform at $43.4 billion. He made the offer days after he acquired a 9% stake in the company to become its largest shareholder – which was soon trumped by Vanguard Group, which raised its stake to 10.3% according to an SEC filing.
Speaking at a TED Talk on Thursday, Musk said that he has a “plan B” in place should his bid to buy Twitter fail.
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