Twitter prepares ‘poison pill’ defence against Elon Musk bid

In a bid to prevent Elon Musk’s takeover effort, Twitter has unveiled a limited-duration shareholder rights scheme.

Elon Musk, Tesla’s CEO and the world’s wealthiest man, had proposed to acquire the social media network for $43.4 billion, saying he wanted to unleash its “amazing potential” to encourage free speech and democracy throughout the globe

By unanimously approving a proposal that would enable current shareholders to purchase stock at a steep discount, Twitter’s board on Friday aimed to diminish new investors’ stake in the company’s shares.

“Poison pill” is a financial term for a way that signals Twitter would fight against an aggressive acquisition by Musk. If a shareholder acquires more than 15% of the firm in a purchase that has not been authorised by the board, it will take effect and expire on 14 April 2023.

According to Twitter, “The Rights Plan does not restrict the Board from negotiating with parties or approving an acquisition deal if the Board feels that it is in the best interests of the company and its shareholders.

After months of tension between Elon Musk and Twitter, the social media site has finally responded. After months of secretly acquiring a 9.2 percent interest in Twitter, Elon Musk announced on April 4 that he had become the company’s biggest shareholder. After that, he was granted a seat on the board, but when Musk rejected, the decision was overturned.

Social media workers are worried about the future of their business under Musk’s leadership, and many are frustrated that the acquisition’s terms are still unknown.

On Thursday, CEO Parag Agrawal allegedly reassured staff that the takeover issue was not holding the firm hostage, according to reports. Reuters claimed that he urged workers to stay focused and said, “We as employees decide what happens.”

A bidding battle is possible, but few experts are ready to predict on what may happen next. After hearing of Musk’s bid for Twitter, the buyout company Thoma Bravo LP got in touch with the social media giant on Friday, according to Reuters.

The Vanguard group bought additional Twitter shares after Musk said he had become the firm’s top stakeholder, and it has now eclipsed him with a 10.3 percent stake in the company. As Twitter’s former CEO and co-founder Jack Dorsey remarked in a tweet on Friday, such acquisitions are always a risk for the firm.

“Twitter has always been ‘for sale,'” he said, “as a public corporation.” It’s “really the problem.”

One investor is suing Tesla CEO Elon Musk in a prospective class action lawsuit for failing to declare his purchase of shares on Twitter before the necessary date, which might result in a class action lawsuit.

An investigation by the Securities and Exchange Commission, including charges of insider trading based on Musk’s own tweets, is underway at the time of the complaint.

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