Twitter on Friday adopted a limited duration shareholder rights plan, often called a ‘poison pill,’ just a day after billionaire Elon Musk offered to buy the company for $43 billion.
Twitter’s board of directors voted unanimously in favor of the plan, which would make it more difficult for Musk to purchase the social media company and take it private.
The provision will go into effect if Musk, or any other investor, acquires more than 15% of Twitter’s shares.
Under the new ‘poison pill’ provision, shareholders other than Musk will be able to acquire more shares of the company at a discount, lessening the value of Musk’s shares.
Musk currently owns about 9% of the company’s shares. He was given the opportunity to grow his stake last week when Twitter’s CEO announced he would join the board, however, days later Musk changed his mind and decided not to join.
Twitter said its plan wouldn’t prevent the board from engaging with parties or accepting an acquisition proposal if it’s in the company’s ‘best interests.’
‘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,’ Twitter said in a press release Friday.
The plan is set to expire April 14, 2023.
Twitter revealed in a securities filing Thursday that the Tesla and SpaceX Ceo offered to buy the company for over $43 billion with the hopes of transforming it into a private company to build trust with users.
‘I believe free speech is a societal imperative for a functioning democracy,’ Musk said in the filing. ‘I now realize the company will neither thrive nor serve this societal imperative in its current form.’
During a live-streamed TED2022 conference in Vancouver on Thursday, Musk acknowledged he was ‘not sure’ he would actually be able to buy Twitter.
Musk added that he has a Plan B if his offer to buy the company and take it private, which he called his ‘best and final,’ is rejected, but declined to provide details of his plan during his TED interview.
But Musk said “there is” a Plan B if his initial offer to buy the company and take it private, which he called his “best and final,” is rejected. Musk declined to provide further details in the TED interview.
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