Twitter’s board of directors has implemented a limited-time shareholder rights plan called the Poison Pill, which could make it difficult for Elon Musk to take over the company. Twitter has adopted the poison pill to limit Elon Musk’s ability to increase his stake in the social media platform. Tesla CEO Elon Musk is in discussion these days for offering to buy microblogging site Twitter. Meanwhile, Twitter’s board of directors has made a new plan to prevent Musk from buying Twitter. Twitter on Friday said it has adopted the Poison Pill, which will have the ability to stop anyone holding more than a 15 percent stake in the company by selling more shares at a discount to other shareholders.
The poison pill is a defense strategy used by a target company to prevent a potentially malicious takeover by an acquiring company. Companies use this trick to make them appear less attractive to the potential acquiring company. As the name suggests, a poison pill is something that is very difficult to swallow or accept. However, this is not always the first or best way to protect a company. Poison pills are generally quite effective. The poison pill gives existing shareholders the right to purchase additional shares at a discount, effectively reducing the ownership interests of the new hostile party. The Poison Pill Plan is being seen as a major blow to Elon Musk’s efforts. The Twitter board has said in a press release that this plan has been adopted after a legally non-binding proposal to take over Twitter. Elon Musk has offered to buy Twitter for $43 billion. Musk was previously offered a seat on the board at the social media company, which Musk refused. It was only after he refused the offer of a place on the board that there was a possibility that Elon Musk was considering increasing the stake in the company. On the other hand, Elon Musk’s offer has also been turned down by Twitter’s shareholder and Saudi Arabia’s Prince Al Waleed bin Talal Al Saud.