Twitter uses “poison pill” to prevent Elon Musk from taking over

Twitter is fighting against being bought by billionaire Elon Musk. Accordingly, Twitter uses a “shareholder rights plan“, colloquially known as a “poison pill“, which is a type of defensive tactic used by a corporation’s board of directors against a takeover.

poison pill

Journalist Paul Harloff of the Associated Press (USA) said: “The stock market is closely watching the deal between Elon Musk and Twitter. Two weeks ago, Elon Musk announced he owns 9% of Twitter shares. But now, he wants to buy all. Twitter has started working on a self-defense plan, or “poison pill”, to prevent Elon Musk from buying the company”.

The ingredients of each “poison pill” are different, usually increasing the number of shares of that company on the stock exchange, thereby increasing the value of that company higher than it actually is, making the price to buy the company becomes much more expensive, discouraging the acquirer.

Since the 1980s, this strategy has gained popularity as publicly listed companies have resisted being bought by billionaires.

poison pill
Currently, Elon Musk owns about 9% of Twitter shares

Currently, Twitter has not released all information about the “poison pill” used to deal with Elon Musk. However, when a shareholder starts to gather 15% of the shares or more, the “poison pill” plan will be implemented. Currently, Elon Musk only owns about 9% of Twitter shares and is currently the largest shareholder.

The “poison pill” therapy will increase the value of the company. Twitter also stressed that its “poison pill” will not prevent an offer to buy the company at a higher price.

With an estimated net worth of $265 billion, Elon Musk has enough money to pay more than the $43 billion he’s offering to Twitter.

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