Twitter is retaliating against Elon Musk’s takeover effort. Twitter is implementing a “Poison Pill” strategy to shield itself against Musk acquiring more shares and give it time to find alternatives. Twitter’s board agreed Friday.
A shareholder rights plan employs reduced share prices to decrease the holdings of new, hostile owners. Several entertainment firms have pursued such strategies in recent years, including Cineplex, iHeartMedia, and Six Flags Entertainment. Poison pills are rare in the tech industry, especially among organisations of Twitter’s scale.
The proposal responds to Musk’s takeover offer on Thursday. The “limited duration” plan would kick in if a shareholder acquired more than 15% of the company without the board’s approval.
Twitter noted in a statement that the Rights Plan “does not preclude the Board from talking with parties or accepting an acquisition proposal.”
On Monday, Musk said that he had acquired over 9% of Twitter’s stock and has been publicly discussing how the company could improve or change its product. Musk became Twitter’s largest non-U.S. shareholder.
Musk spoke at the TED conference in Vancouver shortly after the acquisition offer was made. “Twitter has kind of become the de facto town square,” he remarked, adding that he wants to open-source the algorithm.” I don’t care about the economics; I feel that having a widely acceptable and inclusive platform is critical to the survival of civilisation.”
Last week, Twitter announced Musk would join the board, granting him a “stand-still” deal preventing him from acquiring more than 14.9% of the firm. Musk said on Twitter on Saturday that he will not be joining the board.
“There will be diversions ahead, but our aims and priorities remain unchanged,” tweeted Twitter CEO Parag Agrawal late Sunday night. Nobody else decides or executes for us.”
He said that the corporation would remain open to Musk’s ideas. Musk may have chosen not to join the board because of its fiduciary responsibilities, according to Agrawal.
Musk said in a text message to Twitter board chair Bret Taylor that if the firm didn’t accept his offer, he might sell his stock.
He stated that if his offer isn’t accepted, he will have to reconsider his stake, my position as a shareholder if my offer is not accepted,” he continued.“I’m not actually convinced I will be able to acquire it,” Musk stated Thursday at TED, adding cryptically that he had a “Plan B” if his offer was refused. The poison pill may be the best choice for Twitter’s board to get rid of Musk’s involvement.