Twitter’s ‘Poison Pill’ strategy will trigger if any acquisition of more than 15% of the firm’s stock happens without its approval.
A couple of days ago, Tesla and SpaceX CEO and co-founder, Elon Musk made it clear that Twitter will keep facing a tough time for a while. The tech CEO offered to buy 100% of Twitter for a rather hefty amount of $43 billion, which means $54.20 a share in cash. The move came just a few days after it was announced that Musk won’t be joining Twitter’s Board, by the fairly new CEO – Parag Agarwal. However, the microblogging website now has a counter for Musk’s hostile takeover bid. On Friday, the company announced that it is adopting a strategy called ‘Poison Pill’ to hold Musk’s offer for a while. What is the ‘Poison Pill’ Strategy? In the most simple terms, a ‘Poison Pill’ is a defence strategy that lets company shareholders purchase additional shares in a company at a discounted price. This makes the buyout process more costly for the other party (Musk in this case), which often results in diluting its ownership interest. This strategy, officially known as the shareholder rights plan, was introduced back in the 1980s and is often used by companies in such hostile takeover situations.
