Twitter’s board unanimously adopted a “poison pill” following Elon Musk’s proposition to purchase the company for $43 billion.
A poison pill is typically used by companies to discourage a takeover by an unwanted person or entity.
Now, shareholders will be able to buy discounted shares if any person or group seeks to acquire at least 15% of Twitter’s common stock without the board’s approval. By doing so, the stake being sought out by the entity would be weakened.
The plan is expected to expire on 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,” the company’s press release stated.
However, the social media platform added that this plan would not necessarily keep the board from accepting an acquisition offer.
Currently, Musk is the largest shareholder of Twitter after he purchased a 9.2% stake into the company.
The billionaire was expected to join Twitter’s board, which would have limited his stake acquisition to 14.9%, but Musk walked back on this move and soon offered to buy the company whole.
During the TED2022 conference last week, Musk said that he wanted to emphasize freedom of speech on the platform and improve Twitter’s algorithm. However, he added that if his “best and final” offer is rejected, he may sell off his remaining stock.