Twitter board takes poison pill against Elon Musk’s attempt to takeover

Twitter announced late Friday night that it activated the “poison pills” defense in an attempt to stop Tesla CEO Elon Musk’s attempts at taking control of the company. Following an uncomplimented, binding proposal to buy Twitter, the company’s Board of Director unanimously approved a “shareholder rights” plan or “Rights Plan” for a short duration.

If Musk attempts to take control of the company, the Rights Plan will allow certain shareholders to purchase more shares. Twitter announced in a press release that its ‘Rights Plan” will decrease the chance that Musk or any other individual can take control via open market accumulation, without having to pay all shareholders a control premium and without giving the Board enough time to inform their decisions.

Twitter added that the Rights Plan will allow an entity, person, or group to acquire beneficial ownership of 15 percent or more Twitter’s outstanding common stocks in a transaction approved by the Board.

The Rights Plan will be in effect for one year, and will then expire on April 14th 2023.

The announcement is made just after Parag Agarwal, Twitter’s CEO, said at Thursday’s Q&A that the board of the company would not be held hostage by Musk’s news. The CEO of Twitter, Parag Agarwal had stated that Twitter was currently evaluating Musk’s offer and would decide “in the best interests of our shareholders”. Musk tweeted that it would not be in the shareholders’ best interests to vote on this offer prior to the meeting. Responding to questions about the possibility that Twitter’s board might reject Musk’s offer, Musk tweeted: “They own the company and not the board”

Musk offered to purchase Twitter at $54.20 per share in cash. This amounts to approximately $43 billion.

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Conclusion

The Board of Directors of Twitter activated the “poison pills” defense in an attempt to stop Elon Musk’s takeover. The Board approved a shareholder rights plan that decreases the chance that Musk or any other individual can take control via open market accumulation, without having to pay all shareholders a control premium and without