Twitter countered Elon Musk’s takeover bid with a poison pill

Poison pills have been around for decades. Attorney Martin Lipton, founding partner of Wachtell, Lipton, Rosen & Katz, invented the maneuver, also known as the Shareholder Rights Plan, in 1982. It was a way to strengthen a company’s defenses against unwanted takeovers by so-called corporate raiders like Carl Icahn and T .Boone Pickens.

They have since become a part of the corporate tool kit in America. Netflix introduced a poison pill in 2012 to stop Mr. Icahn from buying up his stock. Papa John’s used one against the pizza chain’s founder and chairman, John Schnatter, in 2018.

According to securities experts, investors rarely try to sidestep a poison pill by buying stocks beyond the threshold set by the company. One said it would be “financially ruinous,” even for Mr Musk.

But Mr. Musk, who is worth more than $250 billion and is the CEO of Tesla and SpaceX, rarely sticks to precedent. He announced his intention to acquire Twitter on Thursday, releasing an unsolicited offer valued at more than $40 billion. In an interview at a TED conference later that day, he questioned Twitter’s moderation policy, which governs content shared on the platform.

Twitter is “the de facto marketplace,” Mr Musk said, adding, “it’s really important that people have the reality and perception that they can speak freely within the confines of the law.” Twitter currently bans many types of content, including spam, threats of violence, sharing of private information, and coordinated disinformation campaigns.

Mr Musk argued that privatizing Twitter would allow more free speech on the platform. “My strong intuitive feeling is that having a public platform that is maximally familiar and inclusive is extremely important for the future of civilization,” he said during the TED interview. He also insisted that the algorithm Twitter uses to classify its content and decide what hundreds of millions of users see on the service every day should be publicly available to users.

Mr Musk’s concerns are shared by many executives at Twitter, who have also pushed for more transparency about his algorithms. The company has published internal research about bias in its algorithms and funded efforts to create an open, transparent standard for social media services.