Twitter’s board of directors has taken desperate measures to prevent Tesla CEO Elon Musk from staging a successful hostile takeover of the company. To do this, they used the Poison Pill option.”
On Friday, the board announced it would enact a “shareholder rights plan” that would give certain shareholders the right to buy more shares if an outsider tries to take control of the company. The plan would remain in effect until April 14, 2023.
“The Rights Plan will reduce the likelihood that any company, individual or group will gain control of Twitter through accumulation in the open market without paying all shareholders a reasonable control premium or allowing the board of directors adequate time to make informed judgments.” and take the best actions in the interests of shareholders,” read a Twitter statement describing the plan.
By swallowing the poison pill, Twitter has shown its determination to stop the world’s richest man and a vocal critic of the site from taking it over.
Musk became Twitter’s controlling shareholder for the first time after buying 9.2% of its shares on April 4. Shortly thereafter, Twitter CEO Parag Agrawal said that Musk would join the company’s board of directors. He acknowledged that Musk was a “passionate supporter and intense critic” of Twitter, but insisted it was “exactly what we need.”
It didn’t take long for that honeymoon to end. On April 11, Twitter announced that Musk would no longer be joining the board, and three days later he launched his hostile takeover bid. Twitter’s board of directors confirmed Musk’s “unsolicited, non-binding” offer but declined to commit to a sale.
Musk himself acknowledged that his bid may not be successful, but he hasn’t backed down in his calls for major changes to the site. Though Musk is a prolific and notorious user of Twitter, he has repeatedly accused him of failing to protect freedom of speech.
However, his means of improvement have remained vague. Musk has suggested adding an editing feature to the site and providing better insight into Twitter’s algorithm to understand how the platform promotes content. Musk has also proposed turning Twitter back into a private company, just like he proposed for Tesla, a move that is pending and earned him legal scrutiny from federal agencies.
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