Twitter adopts ‘poison pill’ defense to thwart Elon Musk takeover

PROVIDENCE, RI (AP) — Twitter said Friday its board of directors had unanimously adopted a “poison pill” defense in response to Tesla CEO Elon Musk’s proposal to buy the company and to privatize it.

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’s plan would go into effect if Musk’s roughly 9% stake increases to 15% or more. Even then, Musk could still take control of the company with a proxy fight by eliminating the current directors. Twitter said the plan does not prevent the board from engaging with parties or accepting an acquisition proposal if it is in the “best interest” of the company.

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.

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