Twitter might respond to Musk’s offer to buy with ‘poison pill’

According to the Washington Examiner, in response to Elon Musk’s offer to buy Twitter, the social media platform is considering using its “poison pill” protocol. 

The Washington Examiner, here, based its statement on a new report from the Wall Street Journal, which is based on a person familiar with the situation.

The purpose of a “poison pill” provision is to make a hostile takeover of the company more difficult. It does so by allowing the company’s existing shareholders to buy more shares at a discounted price.

The result is a dilution of the ownership interest of Musk, the party who is trying to take the company over.

Background

Musk recently made news headlines by becoming Twitter’s largest shareholder. He did so by recently purchasing a 9.2% stake in the company.

Musk, the CEO of Tesla and widely regarded as the world’s richest man, now owns 73,486,938 shares of Twitter. Musk, though, didn’t stop there.

From there, Musk went on to offer to buy Twitter. In exchange for 100% ownership of Twitter, he offered $54.20 per share, which overall, puts the offer in the range of $41 to $43 billion.

Twitter has yet to respond to Musk’s offer. The company’s board met on Thursday, which is where it appears to have discussed the “poison pill” option. This would suggest that Twitter is trying to do whatever it can to stop Musk from acquiring it.

Why does Musk want Twitter?

Musk has said that he is looking to “unlock” Twitter’s “extraordinary potential.”

Musk has suggested that he is not in favor of the censorship that we have seen from Twitter and that he would like Twitter to adhere to a free speech principle.

In a letter that he sent to Twitter chairman Bret Taylor on April 13, Musk wrote:

I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form.

“Twitter needs to be transformed as a private company,” Musk added.

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