Twitter adopts ‘poison pill’ to thwart Musk takeover

Twitter said in a statement that the plan will “reduce the likelihood” of Musk or any entity taking control of the company without paying a bonus to shareholders or giving the board more time.
As a result, Musk will have to negotiate with the board, revise his offer, or be prepared to shell out significantly more money, which corporate governance experts have said is highly unlikely.
“A poison pill is a way to keep someone away until you can get a higher price. It makes it outrageously expensive for the person to buy it,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance. from the University of Delaware “It’s a doomsday machine, it’s the atomic bomb, everyone’s wiped out – that’s the key.”
Musk did not immediately respond to a request for comment. Musk told a TED talk on Thursday that he has a back-up plan if his initial bid for the social media giant doesn’t work out, but he declined to elaborate.
The so-called poison pill is the latest move in a roller coaster series of events over the past two weeks, following Musk’s big reveal on April 4 that he had taken a more than 9% stake in the social media giant. At the time, this made the CEO of Tesla and SpaceX Twitter’s largest shareholder and sent shockwaves through Silicon Valley. Prior to the disclosure, Musk had conducted polls of his roughly 80 million followers seeking feedback on Twitter’s support for free speech and even suggested that a new social media company might be needed.
The following day, the company said it had invited Musk to join its board, a move that would limit the billionaire’s stake to less than 15% and avoid a takeover. On Sunday, Twitter CEO Parag Agrawal tweeted that Musk had turned down the seat, following a tweet from Musk in which he questioned whether the company’s headquarters in San Francisco should be used as a safe haven for sans -shelter and made a vulgar joke about the name. He also wondered if the platform was dying.
Musk’s investments in Twitter date back to late January. Months earlier, the Tesla CEO had sold billions of shares in the company after pledging to sell 10% of his stake in the world’s most valuable automaker.
Then this week, he launched a hostile takeover bid to take Twitter worth about $43 billion.
Musk offered to buy Twitter for $54.20 per share. This represents a significantly higher price than immediately before Musk’s involvement, but lower than what Twitter has traded at times over the past year.
The “poison pill” would be triggered if Musk crossed the 15% ownership threshold on Twitter.
The terms of Twitter’s plan suggested that shareholders would have the right to buy stock at a set price – which would then trade for a market value twice what they bought it for. Musk, the potential buyer, would not be eligible for the discount.
Musk has spent weeks stressing the need for “freedom of speech” on the social media site, launching polls and launching tweets aimed at influencing the discussion. It appears to be of relatively recent interest to the explosive CEO, who also runs aerospace company SpaceX, tunneling firm The Boring Company and brain chip start-up Neuralink.
He called the problem a “civilizational risk”, placing it – for him – in the ranks of population collapse and the usurpation of humans by artificial intelligence.
Musk, at the conference, said Twitter’s algorithm should be “open source” so that content moderation decisions are made fully public and people can see what types of tweets are being promoted and removed. Twitter said it does not limit tweets based on views or opinions expressed within them.
Douglas MacMillan contributed to this report.