Twitter adopts ‘poison pill’ policy in bid to thwart Elon Musk takeover

Twitter’s board on Friday enacted a defensive measure in order to deter Elon Musk’s $43 billion hostile takeover bid of the social media giant.

The corporate expression “poison pill” gives Twitter’s existing shareholders time to purchase additional shares at a discount, thus diluting Musk’s ownership stake.

The move is designed to make it difficult for anyone, including Musk, to build a stake worth more than 15% of the company. Musk disclosed a 9.2% stake in Twitter earlier this month.

“A poison pill is a way to stave off someone until you can get a higher price. It makes it outrageously expensive for the person to buy it,” said Charles Elson, the founding director of the University of Delaware’s Weinberg Center for Corporate Governance. “It’s a doomsday machine, it’s the atomic bomb, everyone gets wiped out — that’s the key.”

“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 its statement.

Musk’s first public statement after Twitter’s announcement came Friday afternoon, through a quote tweet of a Twitter poll by the account @BTC_Archive asking: “Do you want Elon Musk to buy Twitter?”

“Thanks for the support!” the billionaire wrote while sharing the poll, which at the time of writing had a majority of respondents voting “Yes.” Musk did not respond to a request for comment from CNN Business.

Musk said at a TED conference Thursday that he has a backup plan if his initial bid for the social media giant does not work out, but he did not go into further details.