Twitter’s board of directors has unanimously adopted a “poison pill” defense in response to Elon Musk’s proposal to buy the company and take it private, the social media giant has said.
The strategy is officially known as a “limited-duration shareholder rights plan” and is designed to defend against hostile takeovers.
Twitter said the move aims to allow its investors to “realize the full value of their investment” by reducing the likelihood that an individual can gain control of the company without either paying shareholders a premium or to give the board more time.
The social media giant’s plan would come into effect when Mr Musk’s stake grows from around 9% to 15% or more.
Even then, the Tesla boss could still take over the company in a proxy fight by voting out the current directors.
Twitter said the plan does not prevent the board from engaging with parties or accepting an acquisition proposal if it is in the company’s “best interests”.
Twitter revealed in a securities filing on Thursday that Mr Musk has offered to buy the company outright for more than $43bn (£33bn)and said the social media platform “needs to be transformed as a private company” to build trust with its users.
“I believe freedom of speech is a societal imperative for a functioning democracy,” Mr Musk said in the filing. “It is now clear to me that the company will not thrive in its current form nor serve this societal imperative.”
Later Thursday, during a stage interview at a TED conference, he went even further: “Having a public platform that is maximally trustworthy and inclusive is extremely important for the future of civilization.”
Mr Musk revealed in regulatory filings in recent weeks that he had been buying Twitter stock on an almost daily basis since Jan. 31, ending up with about a 9% stake. Only the Vanguard Group controls more Twitter shares.
A lawsuit filed in federal court in New York on Tuesday alleged that Mr Musk illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.
After Mr Musk announced his stake, Twitter was quick to offer him a seat on the board on the condition that he would limit his purchases to no more than 14.9% of the company’s outstanding shares. But the company said five days later that Mr Musk had declined.
A poison pill’s path is a “predictable” defensive maneuver, although it could be seen as a “sign of weakness” and viewed unfavorably on Wall Street, according to Wedbush Securities analyst Daniel Ives.
Twitter uses ‘poison pill’ strategy to resist Elon Musk’s takeover bid | Science and technology news
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