‘Poison pill’ aimed at Musk’s bid
Twitter adopted a so-called poison pill Friday that would help prevent it from undergoing a hostile acquisition after Elon Musk put in an offer to buy the social media company for $43 billion.
The board unanimously adopted the limited duration shareholder rights plan.
How does it work? Under the plan, if any person or group acquires 15 percent or more of Twitter’s stock without the board’s approval, other shareholders are allowed to purchase additional shares at a discount.
The maneuver, developed in the 1980s, helps companies avoid being acquired by another entity or person. It makes it more expensive for the acquirer to buy up shares, and gives a company more time to evaluate offers.
“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,” Twitter said in a press release.