In order to thwart Elon Musk’s takeover plan, Twitter’s board of directors on Friday announced it had adopted a new “shareholder rights plan.” In a press release, the board of directors said it made the decision “following an unsolicited, non-binding proposal to acquire Twitter.”
Known as the poison pill, the shareholder rights plan gives shareholders the right to purchase more Twitter shares within a year period, in a bid to disrupt a hostile takeover attempt. The plan is triggered if an entity, a group or a person party acquires 15 percent of the company’s board without prior approval by the Board.
According to Bloomberg sources, Twitter’s board adopted the plan to stifle Musk’s takeover bid they could yet accept the offer. Twitter CEO Parag Agrawal had earlier told employees on Thursday that the company was assessing the offer.
Musk turned down an offer to join Twitter’s board of directors and followed subsequently with an offer to take over the company. In a reply to the poison pill news on Thursday, Musk replied on his Twitter account saying the board “would be breaching their fiduciary beauty. The liability they would thereby assume would be titanic in scale.”
While speaking at a TED Conference on Thursday, Musk said he was unsure if he “will actually be able” to acquire Twitter and that he intends to keep “as many shareholders as is allowed by law,” and not to keep complete ownership of the company to himself.