Twitter has adopted a ‘poison pill’ tactic in order to obstruct Elon Musk’s plans to take over the social media company.
Twitter’s board unanimously approved a limited-duration shareholder rights plan on Friday. The so-called ‘poison pill’ would allow existing shareholders to buy stocks at a substantial discount to dilute the holdings of new investors.
In place for a year, the strategy means existing investors will be able to buy more shares at a discount if Musk’s current nine per cent stake rises more than 15 per cent.
Billionaire Musk had outlined ambitions to buy the platform for $43.4bn, after previously U-turning on a plan to join Twitter’s board himself.
Under his plans, the Tesla boss said he would unlock Twitter’s “extraordinary potential” to back free speech and democracy.
The company stated the policy had been introduced after an “unsolicited, non-binding proposal,” from Musk.
Responding to speculation about the strategy on Twitter, Musk had slammed the platform’s board, with relations between the two now set to sour further.
“If the current Twitter board takes action contrary to shareholder interests, they would be breaching their fiduciary duty,” Musk said. “The liability they would thereby assume would be titanic in scale.”
In a statement, Twitter said its new plan “does not prevent the board from engaging with parties or accepting an acquisition proposal if the board believes that it is in the best interests of Twitter and its shareholders.”
There was some speculation of a bidding war after Reuters reported that Thoma Bravo LP expressed interest in making a rival bid to Musk’s.
What’s more, Vanguard group bought more shares and quickly surpassed Musk once more as the largest shareholder, after Musk’s own stake rose to 9.2 per cent.
The Pennsylvanian investment fund now owns 10.3 per cent of the company.
Musk offered to buy Twitter for $54.20 per share on Thursday. This represents a 38 per cent premium to the closing price of the firm’s stock on 1 April, the day before Musk snapped up 9.2 per cent of shares.
“Since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company,” Musk said in a letter to Twitter chairman Bret Taylor last week.
He said: “My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.”