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Twitter adopts ‘poison pill’ defense in Musk takeover bid

Twitter said in a statement Friday that its board had unanimously adopted a “poison pill” defense in response to Tesla CEO Elon Musk’s proposal to buy the company and take it private.

Twitter said the move, officially called a “time-limited shareholder rights plan,” aims to allow its investors to “realize the full value of their investment” by reducing the likelihood that one person could take control of the company. company without paying shareholders a bonus or giving the board more time. Poison pills are often used to defend against hostile takeovers.

Twitter had revealed in a securities filing on Thursday that Musk had offered to buy the company for more than $43 billion, saying the social media platform “needs to be turned into a private company” to build trust with its users.

“I believe freedom of speech is a societal imperative for a functioning democracy,” Musk said in the filing. “I now realize that the business will not thrive or serve this societal imperative in its current form.”

Later Thursday, during an on-stage interview at TED 2022, he went even further: “Having a broadly inclusive, maximum-trust public platform is extremely important for the future of civilization.”

Musk revealed in regulatory filings over the past few weeks that he bought Twitter shares in near-daily batches starting Jan. 31, ending up with a roughly 9% stake. Only Vanguard Group controls more Twitter shares. A lawsuit filed in federal court in New York on Tuesday alleged that Musk unlawfully delayed disclosing his stake in the social media company so he could buy more shares at lower prices.

After Musk announced his participation, Twitter quickly offered him a seat on its board of directors on the condition that he limit his purchases to no more than 14.9% of the company’s outstanding shares. But the company said five days later Musk declined.

A poison pill is a “predictable” defensive maneuver, though it could be seen as a “sign of weakness” and viewed unfavorably on Wall Street, Wedbush Securities analyst Daniel Ives said in a mailed note. electronic.

ABC News

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