Twitter announced Friday that it has decided to adopt a limited duration shareholder rights plan, known as a “poison pill,” in response to Tesla CEO Elon Musk’s $43 billion acquisition offer a day earlier—as the social media company prepares to resist a potential hostile takeover.
Twitter’s board of directors voted unanimously to adopt the shareholder rights plan, often called a “poison pill,” which is commonly used to fend off hostile takeovers by diluting shares.
Under the new plan, if any shareholder acquires more than a 15% stake in Twitter without the board’s approval, other shareholders will be allowed to add to their stakes at a discounted price.
Twitter is clearly gearing up to resist any unwarranted takeover, with the decision coming a day after Tesla billionaire Elon Musk made an unsolicited $43 billion offer to buy the social media company and take it private.
“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 said in a press release.