Twitter adopts ‘poison pill’ defence against Musk bid

Twitter said its board unanimously adopted a so-called shareholder rights plan, also known as a “poison pill,” as the struggle for control of the social media platform intensified

Twitter moved on Friday to defend itself against Elon Musk’s $43bn hostile takeover bid, announcing a “poison pill” plan that would make it harder for the billionaire to get a controlling stake. Musk’s proposed buyout faces several hazards, including possible rejection and the challenge of assembling the money, but could have significant impacts on the key social media service if consummated. Twitter said its board unanimously adopted a so-called shareholder rights plan, also known as a “poison pill,” as the struggle for control of the social media platform intensified. The manoeuvre makes it harder for a buyer to build too big of a stake without board approval, by triggering an option that allows other investors to buy more of a company’s shares at a discount. Musk sent shockwaves through the tech world on Thursday with an unsolicited bid to buy the company, stating the promotion of freedom of speech on Twitter as a key motive for what he called his “best and final offer.” The world’s richest person offered $54.20 a share, which values the social media firm at some $43bn, in a filing with the Securities and Exchange Commission. He has not yet reacted to the poison pill, but tweeted after his bid was announced that the board would face “titanic” legal liability if it goes against the interests of shareholders in rejecting his offer. The board’s “rights plan” kicks in if a buyer takes 15% or more of Twitter’s outstanding common stock in a transaction not approved by the board — Musk holds 9%. Analyst Dan Ives predicted that the board’s move would “not be viewed positively by shareholders” given both the potential dilution of stock and the signal it sends of hostility towards being bought. He foresaw a “likely” court challenge. Musk has already acknowledged he was “not sure” he would succeed and refused to elaborate on a “plan B,” though in the filing he noted a rejection would make him consider selling his existing shares.