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15 Apr, 2022 11:16

Twitter mulling ‘poison pill’ defense against Musk buyout – reports

The tactic is used by corporations against hostile takeovers
Twitter mulling ‘poison pill’ defense against Musk buyout – reports

Twitter’s board is considering adopting a “poison pill” strategy to protect the company from a hostile acquisition bid, Bloomberg reported on Thursday, citing its sources. This follows billionaire Elon Musk’s $41 billion offer to buy the company.

Also known as a shareholder rights plan, a ‘poison pill’ is a defense tactic used by a target company to prevent or discourage a hostile takeover attempt. The measure allows existing shareholders the right to purchase additional shares at a discount, effectively diluting the ownership interest of a new, hostile party.

Twitter could announce the poison pill as soon as Friday, the sources said. Another scenario under consideration is valuing the offer as too low, they added.

On Thursday, Musk offered $54.20 a share in cash for Twitter, valuing the company at $43 billion. The billionaire said it was his “best and final” offer. In late March, Musk became the social media network’s largest shareholder after acquiring a 9% stake in the company.

Twitter’s board met on Thursday to review the proposal. One of the company’s investors, Saudi Arabia’s Prince Al Waleed bin Talal, reportedly said the deal doesn’t “come close to the intrinsic value” of the popular social media platform.

Speaking later on Thursday at a TED Conference, Musk said he wasn’t sure he “will actually be able to acquire it.” The businessman said he intends to retain “as many shareholders as is allowed by the law,” rather than keeping sole ownership of the company himself.

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