Twitter’s Board Executed a So-Called “poison pill” Measure to Avoid Elon Musk’s Acquisition of the Platform

Twitter’s board executed a so-called “poison pill” measure to avoid Elon Musk’s acquisition of the platform. This is a time-limited shareholder rights plan that prevents takeovers against the will of management, although whether this is in the will of all investors, rather than individual ones, remains a big question mark.

On April 14, it became known that Musk offered to buy the remaining shares of Twitter he does not already own at $54.20 per share. That's a 54% premium over the day before he began investing on Twitter and a 38% premium over the day before his investment was publicly announced. Musk wrote that the “offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.” He also said that he thinks Twitter has extraordinary potential and he will unlock it. Musk's main goal is to make Twitter a platform where free speech thrives.

“Twitter has become kind of the de facto town square, so it's just really important that people have both the reality and the perception that they are able to speak freely within the bounds of the law,” he said during his talk at Technology Entertainment and Design (TED) in Vancouver.

However, the Twitter board strongly disagrees with Musk's policy, although they choose not to directly acknowledge it, for obvious reasons. In an attempt to prevent the social network from becoming a platform where free speech thrives, Twitter’s board executed a so-called “poison pill” measure. On April 15, Twitter's board voted unanimously in favor of such a plan, valid until April 14, 2023.

What is the Twitter Poison Pill Strategy?

This is a limited-term shareholder rights plan that prevents takeovers against the will of management by allowing shareholders to purchase new shares at a discount when any person purchases more than 15% of the company's shares.

“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,” the social media platform announced in a press release on Friday.

At the moment, Musk has not reacted to this, however, he has previously said that he has a Plan B.

© 2022, Eva Fox | Tesmanian. All rights reserved.

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