Twitter Fights Musk

Twitter's board has armed itself against a possible hostile takeover - a day after billionaire Elon Musk made a $43bn (£33bn) offer to buy the platform.


It has adopted what is known as a "limited-duration shareholder rights plan", also known as a "poison pill".


The move will prevent anyone from having more than a 15% stake in the company.


It does this by allowing others to buy additional shares at a discount.


The Twitter board detailed its defence plan to the US Securities and Exchange Commission and put out a statement saying it was needed because of Mr Musk's "unsolicited, non-binding proposal to acquire Twitter".


A takeover bid is considered hostile when one company tries to acquire another against the wishes of that company's management - in Twitter's case, its executive board.


Josh White, former financial economist for the Securities and Exchange Commission, told the BBC that a poison pill is "one of those last lines of defence against a hostile bid takeover".


"We call it the nuclear option," he said.


Mr White says the board has made it clear "that they don't feel like it's a high enough value for the company".  READ MORE...

Twitter's Poison Pill

Twitter does not want to become a plaything of the world’s richest person.

So on Friday, it turned to a tried-and-tested corporate defense mechanism invented in the 1980s — the heyday of the corporate raider — to block a potential takeover attempt by Elon Musk and buy its board some time.

The mechanism, known as a poison pill, has a simple intention: to make it less palatable for a potential buyer to pursue the target company if the buyer accumulates shares above a certain threshold. 

In Twitter’s case, if Mr. Musk bought more than 15 percent of the company, Twitter would flood the market with new stock that all shareholders except Mr. Musk could buy at a discounted price.

That would immediately dilute Mr. Musk’s stake and make it significantly more expensive for him to buy the company. Mr. Musk currently owns a little more than 9 percent of Twitter’s stock.

Twitter said its plan would be in place for just shy of one year. The tool will not stop the company from holding talks with any potential buyer, and will give it more time to negotiate a deal that Twitter’s board believes best reflects the company’s value.  READ MORE...