Twitter Adopts ‘Rights Plan’ in Response to Elon Musk’s Proposal
Following Elon Musk’s bid to acquire Twitter, the Board of Directors have adopted a limited duration shareholder rights plan (the “Rights Plan“), which the social networking platform clearly states was adopted due to the “unsolicited, non-binding proposal to acquire Twitter.”
Termed “poison pill” by the public, the Rights Plan is intended to make it harder for Elon Musk to acquire Twitter and will expire on April 14, 2022.
“The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter. 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,” Twitter stated in a press release.
The Rights Plan conserves the right of the company’s shareholders, excluding Musk, to acquire more shares of the company at a relatively cheap price, reducing Musk’s stake in the company – 9.1%. The provision will be triggered if Musk or any other investor acquires more than 15% of the company’s shares.
“The Rights 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.”
The move marks an effort by social networking platform’s board to take back some control in the deal after Musk’s stunning acquisition offer. The poison pill — a corporate anti-takeover defence mechanism — won’t necessarily stop Musk’s bid in its tracks, but it could make buying the company more expensive or force Musk to the negotiating table with the board.
Following the publication, Musk’s first statement was a response to a Twitter poll by the account @BTC_Archive asking: “Do you want Elon Musk to buy Twitter?”
Musk said while sharing the poll which already had the majority of ‘Yes’ as the response: “Thanks for the support!”