In the “fight” against Elon Musk, Twitter has unleashed a powerful card to prevent Elon Musk from being able to acquire the public company. On Friday, the company announced that it has adopted a limited duration shareholder rights plan, popularly referred to as the “poison pill”.
The decision was reached after a unanimous vote by Twitter’s board. Under this structure, if any individual or group acquires beneficial ownership of at least 15 percent of the company’s outstanding common stock without the board’s approval, other shareholders will be allowed to buy additional shares at a discounted rate. This structure will be in place till the 14th of April, 2023.
Elon Musk currently owns the largest stake in Twitter, more than 9 percent, and more than the holdings of the company’s founder. The past few weeks have seen Elon Musk criticize Twitter for hindering free speech, according to him. The billionaire who intimated launching his own social media platform was offered a seat on Twitter’s board but declined the offer and less than 24 hours later, he declared his intention to buy Twitter for $54.20 per share and his plan to privatize the public company.
The “poison pill” approach is used to prevent a hostile takeover by diluting the stake of the individual or entity looking to takeover such a company. In a statement, Twitter said that “The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
The company, however, mentioned that this plan will not stop the company from accepting an acquisition offer if such an acquisition is considered to have the best interest of the company and shareholders at heart.
On Friday, Twitter’s former CEO Jack Dorsey tweeted that “As a public company, Twitter has always been for sale. That’s the real issue.”
While speaking at the TED2022 conference held on Thursday, Elon Musk was asked by TED head speaker Chris Anderson why he offered to buy the micro-blogging platform. In his defense, Elon Musk said that “I think it’s very important for there to be an inclusive arena for free speech. Twitter has become kind of a de facto town square, so it’s really important that people have both the reality and the perception that they are able to speak freely within the bounds of the law.” He also said that he wanted Twitter’s code and its algorithm to be available on GitHub for the sake of social media transparency adding that “The top priority I would have is eliminating the spam and scam bots and the bot armies that are on Twitter. They’re making the product much worse.”
Elon Musk also said he had a plan B up his sleeves if his plan for Twitter’s acquisition falls through. He however did not provide specific details on that. If he really wants to acquire Twitter, now will be the time to unleash his plan B.
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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