Twitter Serves Up “Poison Pill” To Thwart Elon Musk’s Takeover Bid

Elon Musk is trying to buy Twitter and take it private. Twitter said that they would consider it. And now here’s their answer. They are telling Musk to take off:

Twitter, Inc. (NYSE: TWTR) today announced that its Board of Directors has unanimously adopted a limited duration shareholder rights plan (the “Rights Plan”). The Board adopted the Rights Plan following an unsolicited, non-binding proposal to acquire Twitter.

The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter. 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 Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders.

The Rights Plan is similar to other plans adopted by publicly held companies in comparable circumstances. Under the Rights Plan, the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of Twitter’s outstanding common stock in a transaction not approved by the Board. In the event that the rights become exercisable due to the triggering ownership threshold being crossed, each right will entitle its holder (other than the person, entity or group triggering the Rights Plan, whose rights will become void and will not be exercisable) to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.

The Rights Plan will expire on April 14, 2023.

So in short, this is a “poison pill” strategy that would effectively dilute Musk’s stake in Twitter which would make it far more difficult, but not impossible to buy Twitter and take it private. Now we’ll have to see if Musk is truly serious about buying the company. And what will happen if he can’t.

Stay tuned folks. This is about to get interesting.

2 Responses to “Twitter Serves Up “Poison Pill” To Thwart Elon Musk’s Takeover Bid”

  1. […] seems that interest in Twitter is growing. 24 hours after coming up with a “poison pill” strategy to thwart Elon Musk’s attempt to buy the company, a second suitor has emerged with […]

  2. […] about that “poison pill” strategy that Twitter has adopted. Well, he’s got a plan for that […]

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