Twitter Board Moves to Block Elon Musk Takeover With ‘Poison Pill’

(Photo by PATRICK PLEUL/POOL/AFP via Getty Images)

Twitter adopted a defensive shareholder rights plan on Friday with the intention of thwarting billionaire Elon Musk’s $43 billion takeover bid of the company.

This measure, often referred to in corporate legal jargon as a “poison pill,” allows for current Twitter shareholders to purchase additional shares at a discounted price. This move would dilute Musk’s stake in the company and is a commonly utilized way to ward off hostile takeovers.

Musk divulged a 9% stake in the company, and has since made an offer to purchase  Twitter in cash. On Thursday, the billionaire offered $54.20 per share — which values the company at $43 billion — claiming that this was his “best and final” bid.

The limited shareholder rights plan has been adopted to insulate Twitter’s shareholders and counteract Musk’s aggressive efforts.

The board unanimously agreed to enact the defensive measure on Friday and Twitter released a statement explaining the plan:

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.

It is unclear whether this will deter Musk or incense him to further up his bid and move forward with his hostile takeover of the social media company.

This plan is set to expire on April 14, 2023.