Twitter’s board on late Friday evening announced that its activating the ‘poison pill’ defense to thwart Tesla CEO Elon Musk attempts of taking over the company. The company’s Board of Directors have unanimously adopted a limited duration “shareholder rights plan” or the ‘Rights Plan’ following an “unsolicited, non-binding proposal to acquire Twitter.”
The Rights Plan will enable certain shareholders to buy more shares of the company if Musk attempts to take over the company. Twitter’s board via a press release said that the ‘Rights Plan’ will reduce the likelihood that an organisation or an individual gains control of the micro-blogging platform “through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments.”
“Under the Rights Plan, the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of Twitter’s outstanding common stock in a transaction not approved by the Board,” Twitter’s board added in the release.
This Rights Plan will remain active for one year and it will expire on April 14, 2023.
Notably, the announcement comes shortly after Twitter CEO Parag Agarwal at a Q&A session on Thursday told the employees the company’s board won’t be “held hostage” by the news of Musk’s plans to buy the company. He had also said that Twitter’s board was evaluating Musk’s offer and that it would make a decision “in the best interest of our shareholders”.
Prior to the meeting, Musk had tweeted, “It would be utterly indefensible not to put this offer to a shareholder vote. They own the company, not the board of directors,” in response to a question on the possibility of Twitter’s board rejecting his offer.
Musk has offered to buy Twitter for $54.20 per share of the company in cash, which totals to around $43 billion.
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