Twitter Board Adopts ‘Poison Pill’ to Stop Elon Musk’s Hostile Takeover – Opinion

Twitter has responded to Elon Musk’s offer to buy Twitter for 38 percent more than it’s currently worth, rejecting a windfall profit for its shareholders and violating its fiduciary duty.

According to CNBC, the social media giant’s board has adopted a “poison pill” that will dilute any shares that Musk tries to acquire by allowing current shareholders to increase their shares at a discounted price. This provision takes effect when Musk purchases more than 15% of the company.

Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval, other shareholders will be allowed to purchase additional shares at a discount.

This plan will expire April 14, 2023.

A common tactic to prevent a hostile takeover is to dilute the stake in an entity that is interested.

“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 said in a press release.

It is a terrible move by the company. Although a poison pill plan may be able to thwart hostile takeovers (at least for a time), it lowers each share’s value. That means a lot of people who have invested their money into Twitter stock are about to get screwed if Musk goes ahead and triggers the provision, which I’m sure he will.

You can bet Musk was planning for this, and he’s already indicated that he has a “plan B.” What that is isn’t known yet, but the billionaire didn’t get to where he is by making dumb decisions. It’s pretty clear he’s got something else up his sleeve. This whole fiasco may lead to a revolt of shareholders that could result in Twitter’s board of directors being ousted. How likely that is, I don’t know, but I can’t imagine investors are going to be happy with how this is going down.

Due to the fact that leftist board members put their political needs, such as continued partisan internet censorship, before the financial interests and company leadership, there could be litigations. Musk will even be allowed to sue. He could become a formidable leader if he can get others to do the same. The SEC has regulations that prevent decision-makers from violating shareholders’ fiduciary duties, but Musk is hated by them and they will not likely lift a finger.

You wouldn’t think any of this is going to work out too well for Twitter. It will be a fight for Twitter, but it’s going to get much more intense over the next couple of weeks.

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