‘Poison Pill’ Measure Against Elon Musk from Twitter

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On April 4, Elon Musk, who became the largest shareholder of the company by purchasing 9.2% of Twitter shares, gave up on joining the board of directors for reasons that are not officially known. But yesterday, he made an official offer to buy the entire company for $43 billion , emphasizing that Twitter will not evolve with the current order.

This possible acquisition, which will also turn Twitter into a private company, will undoubtedly be a very difficult decision for Twitter. Twitter, which has already decided to consult Goldman Sachs on Musk’s offer, will implement a strategy to make Musk abandon the offer, according to The New York Times.

The main goal to discourage Musk from buying Twitter:

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According to the news shared by the New York Times, Twitter, Musk’ will benefit from a strategy known as the ‘poison pill’ to prevent from buying the company. With this strategy, the real name of which is the ‘shareholder rights plan’, Twitter management will have the opportunity to zero the chance of a shareholder – Elon Musk, for example – buying a significant stake in the open market and forcing the company into a sale.

This strategy is widely used by companies that actually want to fend off unwanted takeover bids. The strategy allows the company to flood the market with new shares or for existing shareholders other than potential buyers to buy discounted shares . This makes the shareholder’s offer to buy all the shares more expensive. If we go with the example of Elon Musk; Musk had offered to buy the entire company at $54 per share. But as Twitter offers more shares to the market, Musk’s money will increase by $54 per newly released share.

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