(Slay News) – Twitter has responded to Elon Musk’s bid to take over the company with a $43 billion offer by adopting a “poison pill” to fight the tech entrepreneur’s plan.
On Friday, Twitter’s board enacted the defensive measure that is meant to deter Musk’s hostile takeover bid.
The company said in a statement that the board unanimously approved the move today “following an unsolicited, non-binding proposal to acquire Twitter.”
Twitter issued a statement that said:
“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.”
Here is our press release on today’s announcement: https://t.co/32UzyhL2oy
— Twitter Investor Relations (@TwitterIR) April 15, 2022
It's official — Twitter is fighting back against Elon Musk's buyout offer with a 'poison pill' defense https://t.co/h8oeOZNJYc
— Business Insider Tech (@BITech) April 15, 2022
Breaking News: Twitter rebuffed Elon Musk’s takeover bid with a so-called poison pill that would flood the market with new shares if he buys 15% of its stock. Musk currently owns more than 9%. https://t.co/x8IsysIFp0
— The New York Times (@nytimes) April 15, 2022
The “poison pill,” as it’s called in corporate terms, gives Twitter’s existing shareholders time to purchase additional shares at a discount, thus diluting Musk’s ownership stake.
The move is designed to make it difficult for anyone, including Musk, to build a stake worth more than 15% of the company.
A poison pill gives existing shareholders the ability to purchase additional shares in the company at a discount, which in turn dilutes the stake of the person or party seeking to buy the company.
As Slay News previously reported, Musk has revealed that he has a “Plan B” in place should Twitter’s board reject his offer.