Twitter Tries to Stymie Elon Musk's Takeover Bid With 'Poison Pill' Plan
Twitter is resisting Elon Musk's $41 billion bid to buy the company by adopting a “poison pill” plan to stop him from gaining shareholder control.
On Friday, Twitter announced the company’s board had voted to unanimously adopt a “a limited duration shareholder rights plan,” which will last until April 2023.
The plan takes effect when a person or group acquires 15% or more of Twitter’s stock, without approval from the company’s board. If this occurs, then Twitter will allow existing shareholders to buy additional shares at a discount.
In the announcement, Twitter said: “The Rights Plan will 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 or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
This makes clear the plan was designed to stymie the hostile takeover bid. However, it also leaves the door open for Twitter’s board to accept Musk’s offer if the price is right.
The company added: "The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders."
Musk is currently trying to buy the company for $54.20 per share, and says this amounts to a 38% premium over Twitter’s stock price from April 1. However, the poison pill plan would essentially create additional stock shares for Twitter, forcing Musk to potentially pay significantly more to own the company.
It’s also important to note Twitter’s stock hit a high of $77 per share a year ago. As a result, some financial experts say
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