In a statement, Twitter said the new plan would reduce the chances of any individual, group or company taking control of Twitter through open market share purchases without paying “an appropriate control premium” or giving the board enough time. “To make informed judgments”. Musk, who revealed earlier this month that he owns a 9.2% stake in Twitter, suggested in a regulatory filing on Thursday that he buy all of the company’s common stock for $ 54.20 a share. However, investors showed that they saw the offer with skepticism, with the stock closing below its price from the previous day, at $ 45.08 per share. A large investor has already opposed the offer. Saudi Arabia’s Prince Alwaleed bin Talal, who controls more than 4% of Twitter, according to Bloomberg News, said on Thursday he was “rejecting” the offer. In his offer letter, Musk said he wanted to make the company private, adding that his offer was “not a threat.” However, he added that if he is not able to buy Twitter, “he will have to reconsider my position as a shareholder”.
What is a “poison pill”?
A so-called poison pill design is designed to give a company that is the target of a hostile takeover more leverage in the situation. He appeared in the 1980s when lawyers for an oil company targeted by corporate raider T. Boone Pickens advised the company to flood the market with new shares, making it more difficult for Pickens to buy a controlling stake, according to the Corporate Finance Institute. . In the case of Twitter, the plan will take effect if any individual or group buys at least 15% of Twitter shares in a market that is not approved by its board of directors. If triggered by such a market, the plan would give other shareholders the right to buy additional shares of Twitter at a discount, which would then reduce the value of Musk shares. This would substantially reduce the control that Musk could gain through the stock market. Twitter said the plan does not prohibit its board of directors from accepting a takeover bid if it believes it is in the best interests of Twitter and its shareholders.
