Twitter Erects Barrier Against Elon Musk Hostile Takeover Bid With 'Poison Pill' Plan

Twitter’s board of directors has taken desperate measures to prevent Tesla CEO Elon Musk from mounting a successful hostile takeover of the company. To do this, they deployed the “poison pill” option.”

On Friday, the board announced that they would adopt a “shareholder rights plan” that would provide certain shareholders the right to purchase more stock if an outsider attempts to take control of the company. The plan would remain in place until April 14, 2023.

"The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders," read a Twitter statement describing the plan.

By swallowing the poison pill, Twitter has shown its determination to prevent the world’s richest man and a vocal critic of the site from taking it over.

Musk first became a majority shareholder in Twitter after purchasing 9.2% of its stock on April 4. Shortly afterward, Twitter CEO Parag Agrawal said Musk would be joining the company's board. He acknowledged that Musk was a "passionate believer and intense critic" of Twitter, but insisted this was "exactly what we need."

It did not take long for this honeymoon to end. By April 11, Twitter announced that Musk was no longer joining the board and three days later he launched his hostile takeover bid. Twitter’s board acknowledged Musk’s "unsolicited, non-binding" offer, but refused to commit to a sale.

Musk himself acknowledged that his bid may not be successful, but he has not backed down in his calls for major changes to the site. Despite being a prolific and notorious user of Twitter, Musk has repeatedly accused it of failing to protect free speech.

However, his remedies for improving this have remained vague. Musk has proposed adding an edit function to the site as well as providing greater insight into Twitter’s algorithm to understand how the platform promotes content. Musk has also proposed turning Twitter back into a privately-held company just as he has proposed for Tesla, a move that has yet to materialize and earned him legal scrutiny from federal regulators.