Twitter adopts ‘Poison Pill’ to block Musk's takeover

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Twitter adopts ‘Poison Pill’ to block Musk's takeover
16 Apr 2022
min read

News Synopsis

Twitter Inc. has taken steps to protect the company from hostile takeover bids and prevent the unwelcome bid of billionaire Elon Musk to privatize the company and turn it into a fortress of free speech. 

The board of directors has developed a shareholder rights plan. This can be exercised if the parties acquire 15% of the shares without prior approval and will only last for one year. According to a statement on Friday, the plan is designed to ensure that those who control Twitter through its public market accumulation pay a fair control premium to all shareholders.

The poison pill defense strategy gives existing shareholders the right to buy additional shares at a discounted price, effectively diluting the ownership of the other party. Poison pills are common in companies that are under attack from activist investors or in a hostile takeover situation.

Musk first announced his stake in Twitter on April 4, making him the largest single investor. At the TED conference, he hinted that he had Plan B if Twitter's board declined his offer to buy the company. He declined to elaborate further. But in his submission earlier that day, he said he would reconsider his investment if the bid failed.

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