Twitter Board unites against Elon Musk
Twitter, on Friday, announced that it's Board of Directors has unanimously adopted a "Poison Pill" as a step to defend against Tesla CEO Elon Musk's proposal to purchase the company for more than $43 billion and take it private.
Insight Bureau: Twitter, on Friday, announced that its Board of Directors has unanimously adopted a Shareholder “Rights Plan”, also known as a “Poison Pill”, as a step to defend against Tesla CEO Elon Musk’s proposal to purchase the company for more than $43 billion and take it private.
A Poison Pill defence allows existing shareholders, other than the person attempting the takeover, the right to purchase additional shares at a discount, effectively diluting the ownership interest of the hostile party. Poison pills are common among companies during hostile takeover situations.
This move would allow existing Twitter shareholders, except Musk, to buy additional shares at a discount thereby thwarting the billionaire’s unsolicited offer to buy the company and make it a platform for promotion of freedom of speech.
Twitter, in a statement, said that the Rights Plan will reduce the likelihood that any one person or group can gain control of the company through open market accumulation without either paying all shareholders an appropriate control premium or giving the board more time to evaluate the offer.
The Board’s Rights Plan kicks in if a buyer takes 15 per cent or more of Twitter’s outstanding common stock without prior approval of the board.
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