Twitter board adopts ‘poison pill’ plan to block attempted takeover by Elon Musk

Just days after billionaire tech entrepreneur Elon Musk purchased 9.2 percent of Twitter, the CEO of SpaceX and Tesla put forward a proposal Thursday to purchase the entire company at a premium price per share that would equal around $43 billion.

Twitter’s board of directors refused that offer, though, and countered with a “poison pill” policy specifically intended to dissuade or prevent Musk from obtaining a controlling majority of shares, USA Today reported.

The move reeked of political hostility toward Musk, signaled the board’s open opposition to the idea of free speech that Musk seeks to champion, and called into question the board’s commitment to its fiduciary obligations on behalf of its shareholders.

“Poison pill” swallowed

Indeed, soon after Musk proposed paying $54.20 per share to purchase the entirety of Twitter, a per-share price higher than the company’s current value, rumors quickly began to spread of a “poison pill” being considered by the social media platform’s board to block any sale.

In response to those rumors on Thursday, Musk tweeted, “If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty. The liability they would thereby assume would be titanic in scale.”

His warning went unheeded, though, and the Twitter board announced Friday that it had adopted a “limited duration shareholder rights plan” to counter “an unsolicited, non-binding proposal to acquire Twitter.”

The way the “rights plan” works is by offering current shareholders a discount on purchasing newly created shares if any one shareholder — who would be excluded from the special offer — gains a 15 percent stake in the company.

Such a move would instantly dilute the number and value of the current shares and make it extraordinarily difficult, if not impossible, for that one shareholder to acquire a controlling stake.

That said, the board noted in its statement that it reserved the right to engage with or even accept outright a separate offer from a different individual or group to purchase the company if it so desired.

Is another offer already on the table?

Coincidentally enough, one such “separate offer” to essentially buy out Twitter while Musk’s offer is rejected by the board may already be in the works, according to Reuters.

A private equity buyout firm known as Thoma Bravo LP, which manages approximately $103 billion in assets, is said to be exploring options on making a bid to purchase Twitter, though it is unclear at what price and whether the firm will even actually make an offer.

Whether or not one views Musk’s attempted takeover of Twitter as “hostile” — he merely wants to restore the platform to its original intent as a bastion of open and free speech — it is abundantly clear that Twitter’s board views Musk and his proposal with hostility and is willing to dilute and reduce the value of its own company to stop it.

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