Twitter has announced a limited-duration shareholder rights plan that may thwart billionaire entrepreneur Elon Musk’s attempts to take over the company.
Musk, the chief executive of Tesla and the world’s richest person, had offered to buy the social media platform for $43.4bn, arguing he wanted to release its “extraordinary potential” to support free speech and democracy across the world.
In response, Twitter’s board on Friday unanimously approved a plan that would allow existing shareholders to buy stocks at a substantial discount in order to dilute the holdings of new investors.
The method, known as a “poison pill” in the finance world, suggests Twitter will fight Musk to prevent a hostile takeover. It would go into effect if a shareholder were to acquire more than 15% of the company in a deal not approved by the board and expires 14 April 2023.
“The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders,” Twitter said in a statement.
Twitter’s response is the latest twist in a saga between the billionaire and the social media site, of which Musk himself is an avid user. Musk revealed on 4 April that he had become the largest stakeholder in Twitter, quietly scooping up 9.2% stake in the company in recent months. He was then offered a seat on the board, a move that was abruptly reversed after Musk declined.
More details soon …