Twitter announced Friday that it has decided to adopt a limited duration shareholder rights plan, known as a “poison pill,” in response to Tesla CEO Elon Musk’s $43 billion acquisition offer a day earlier—as the social media company prepares to resist a potential hostile takeover.
Twitter’s board of directors voted unanimously to adopt the shareholder rights plan, often called a “poison pill,” which is commonly used to fend off hostile takeovers by diluting shares.
Under the new plan, if any shareholder acquires more than a 15% stake in Twitter without the board’s approval, other shareholders will be allowed to add to their stakes at a discounted price.
The plan, which is “similar to other plans adopted by publicly held companies in comparable circumstances,” expires on April 14, 2023.
Twitter is clearly gearing up to resist any unwarranted takeover, with the decision coming a day after Tesla billionaire Elon Musk made an unsolicited $43 billion offer to buy the social media company and take it private.
The board did note that the poison pill would not prevent it from accepting a future acquisition offer, however, as long as it is deemed to be “in the best interests of Twitter and its shareholders.”