Twitter adopts 'poison pill' plan to prevent Musk hostile takeover
In a bid to curb a scheme by Elon Musk to take over the tech giant, Twitter, the company went adopted a plan to abort the possibility of such action; what does it entail?
Twitter's board of directors adopted a shareholder rights plan that would reduce the likelihood of any person, entity, or group being able to assume full control over the company without paying a premium, the tech giant announced Friday.
The move taken by Twitter follows an offer filed by billionaire Elon Musk to purchase 100% of Twitter for $54.20 per share, putting the company's value at $43 billion.
Musk is currently Twitter's second-largest shareholder, with 9.2% of the company in his pocket after he purchased his share earlier in April. He comes second only to Vanguard, which owns 10.29% of the company, an April 8 SEC filing revealed. The group's bid dethroned the billionaire as Twitter's largest shareholder.
The billionaire's bid was preceded by him hinting on Twitter that he might launch his own social media platform.
It all began with a poll on March 25 on whether or not they believed Twitter rigorously applied to free speech principles, adding that the consequences of the poll will be important and asking them to "vote carefully".
"The Board adopted the Rights Plan following an unsolicited, non-binding proposal to acquire Twitter," the company said in a press release.
The Rights Plan, Twitter explained, would "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."
Musk had held a TED Talk saying he had an alternative plan to take over the company if the tech giant refused his offer, though he also cast doubt on the possibility of him being able to perform such a stunt.
"Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy," he said. "What should be done?"
Musk also proceeded to proclaim himself a "free speech absolutist."
According to Twitter, its Right Plan will expire on April 14, 2023. It also said more details would be provided in an 8K to be filed with the SEC.