Twitter threatens ‘poison pill’ strategy to stop Elon Musk takeover

Twitter’s board threatens a ‘poison pill’ procedure to thwart a takeover by Elon Musk. This will make it more difficult for an entity to purchase a majority stake in the company until at least April 2023.

When Musk buys more than 15 percent of Twitter’s shares, the procedure takes effect whereby existing shareholders can buy new shares at a discount. According to the Wall Street Journal this strategy is more common in publicly traded companies that are at risk of being bought out by a single party.

In such a case, the amount of shares in Twitter is diluted with a large amount of new shares. This allows one entity, in this case Elon Musk, to be thwarted from buying the entire company. To circumvent the poison pill construction, Musk would have to talk to the board of Twitter. Musk insinuated after his offer on Twitter in a Tweet that not the board, but rather shareholders should decide the fate of the platform.

On Friday, it turned out that almost all top executives of Twitter are against such a takeover, although the poison pill procedure does not necessarily exclude a future deal between the platform and the businessman. In addition to his desire to take over the entire platform, Musk also expressed his displeasure with the way it profiled itself.

The Tesla and SpaceX CEO turned out to have bought about 9 percent of Twitter at the end of March. Not long after, he suddenly offered roughly 38 billion euros to take over the social medium in its entirety.