By Emmanuel Nduka
Following his bid to take over the company, Twitter’s Board of Directors has adopted a limited-term shareholder rights plan called a “poison pill” that could frustrate Elon Musk’s acquisition bid.
The “poison pill” provision, announced in a press release on Friday, preserves the right for Twitter shareholders other than Musk to acquire more shares of the company at a relatively inexpensive price, effectively diluting Musk’s stake. The provision will be triggered if Musk (or any other investor) acquires more than 15% of the company’s shares. Musk currently owns around 9% of Twitter’s shares.
The poison pill, is a corporate anti-takeover defense mechanism which marks an effort by Twitter’s board to wrest back some control in the deal after Musk’s stunning acquisition offer.
While it won’t necessarily stop Musk’s bid in its tracks, it could make buying the company more expensive or force Musk to the negotiating table with the board.
“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 company said in its statement.
Meanwhile, Musk’s first public statement after Twitter’s announcement came Friday afternoon, through a quote tweet of a Twitter poll by the account @BTC_Archive asking: “Do you want Elon Musk to buy Twitter?”
“Thanks for the support!” the billionaire wrote while sharing the poll, which at the time of writing had a majority of respondents voting “Yes.”