<p>Twitter&#8217;s board of directors has adopted a &#8220;poison pill&#8221; to thwart Tesla founder Elon Musk&#8217;s bid for a hostile takeover.</p>
<p>The board has adopted a &#8220;limited duration shareholder rights plan,&#8221; which gives Twitter&#8217;s existing shareholders, except Musk, time to purchase additional shares at a discount, Axios <a href="https://www.axios.com/twitter-elon-musk-poison-pill-7a62f6d6-b77a-4481-a2e3-5a7081557a84.html">reported</a> Friday.</p>
<p>The desired effect is clearly to dilute Musk&#8217;s holding in the company, and make the cost of a takeover higher or even prohibitive.</p>
<p class="css-g5piaz evys1bk0">&#8220;A poison pill, devised by law firms in the 1980s to protect companies from corporate raiders, essentially lets a takeover target flood the market with new shares or allow existing shareholders other than the bidder to buy them at a discount,&#8221; The New York Times <a href="https://www.nytimes.com/2022/04/15/business/dealbook/twitter-poison-pill-elon-musk.html?smtyp=cur&amp;smid=tw-nytimes">explained</a>. &#8220;That means anyone trying to acquire the company must negotiate directly with the board.&#8221;</p>
<p class="css-g5piaz evys1bk0">The pill will be activated &#8220;once any individual or a group of people working together buy 15 percent or more of Twitter’s shares,&#8221; the Times noted.</p>
<p class="css-g5piaz evys1bk0">Musk owns about 9% in the company, currently.</p>
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
<p lang="en" dir="ltr">Important:</p>
<p>The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments</p>
<p>&mdash; unusual_whales (@unusual_whales) <a href="https://twitter.com/unusual_whales/status/1515003821226967040?ref_src=twsrc%5Etfw">April 15, 2022</a></p></blockquote>
<p>Notably, in 2008, Yahoo <a href="https://www.itpro.co.uk/609714/timeline-the-saga-of-microsoft-and-yahoo">thwarted</a> a massive takeover attempt from Microsoft by using the &#8220;poison pill&#8221; strategy. More recently, department store chair Kohl&#8217;s Corp. took on the strategy in February in an effort to stop offers that &#8220;did not adequately reflect its future growth and cash flow generation,&#8221; Reuters <a href="https://www.reuters.com/business/retail-consumer/kohls-says-buyout-offers-are-undervalued-2022-02-04/">reported</a>.</p>
<p>Twitter published a press release Friday announcing the new &#8220;Rights Plan.&#8221;</p>
<p>&#8220;Twitter, Inc. today announced that its Board of Directors has unanimously adopted a limited duration shareholder rights plan (the &#8216;Rights Plan&#8217;),&#8221; the company <a href="https://www.prnewswire.com/news-releases/twitter-adopts-limited-duration-shareholder-rights-plan-enabling-all-shareholders-to-realize-full-value-of-company-301526627.html">said</a>. &#8220;The Board adopted the Rights Plan following an unsolicited, non-binding proposal to acquire Twitter.&#8221;</p>
<p>&#8220;The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter,&#8221; the press release continued. &#8220;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.&#8221;</p>
<p>&#8220;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,&#8221; Twitter said.</p>
<p>&#8220;Under the Rights Plan, the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of Twitter&#8217;s outstanding common stock in a transaction not approved by the Board,&#8221; the company added. &#8220;In the event that the rights become exercisable due to the triggering ownership threshold being crossed, each right will entitle its holder (other than the person, entity or group triggering the Rights Plan, whose rights will become void and will not be exercisable) to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.&#8221;</p>
<p>The new plan is set to expire on <span class="xn-chron">April 14, 2023</span>.</p>
<p><strong><em>This is a breaking story, please refresh for updates </em></strong></p>

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Twitter Board Passes ‘Poison Pill’ To Stop Musk Takeover

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Twitter Board Passes ‘Poison Pill’ To Stop Musk Takeover