Twitter Adopts Poison Pill Defense to Block Elon Musk Takeover

Twitter announced that its Board of Directors has adopted a limited duration shareholder rights plan — a “poison pill” in merger and acquisition lingo. The Board adopted the Rights Plan following an unsolicited, non-binding proposal to acquire Twitter. Although the company does not name Elon Must directly, it is trying to prevent the billionaire from buying the social network.

Twitter Adopts Poison Pill Defense to Block Elon Musk Takeover

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Currently, Elon Musk owns 9.2% of Twitter. He also made an offer to acquire 100% of the company’s shares as revealed in a filing with the U.S. Securities and Exchange Commission. He is also willing to pay $54.20 per share. It would be an all-cash offer that values the social network at $43.4 billion.

“I think it’s very important for there to be an inclusive arena for free speech. Twitter has become kind of a de facto town square, so it’s really important that people have both the reality and the perception that they are able to speak freely within the bounds of the law,” Musk said at a conference yesterday. “I don’t care about the economics at all,” he added later in the interview.

For a limited time, existing Twitter shareholders will be able to purchase additional shares at a discount under certain circumstances. If an entity, person or group crosses a threshold, in that case, a 15% stake in Twitter, other shareholders can buy more shares. This way, it would stagger plans to buy more than 15% of the company.

“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 wrote.

The poison pill remains valid until April 14, 2023.

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