Twitter Adopts 'Poison Pill' Defense To Block Elon Musk Takeover Bid

SAN FRANCISCO (CBS SF/AP/CNN) — The latest episode of the Twitter-Elon Musk drama unfolded Friday when the San Francisco-based social media giant announced its board of directors has unanimously adopted a "poison pill" defense in response to Musk's proposal to buy the company and take it private.

Twitter said the move, formally called a "limited duration shareholder rights plan," aims to enable its investors to "realize the full value of their investment" by reducing the likelihood that any one person can gain control of the company without either paying shareholders a premium or giving the board more time.

Poison pills are often used to defend against hostile takeovers.

Twitter's plan would take effect if Musk's roughly 9% stake grows to 15% or more. Even then, Musk could still take over the company with a proxy fight by voting out the current directors.

"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 on Thursday offered to acquire all the shares in Twitter he does not own for $54.20 per share, valuing the company at $41.4 billion. That represents a 38% premium over the closing price on April 1, the last trading day before Musk disclosed that he had become Twitter's biggest shareholder, and an 18% premium over its closing price Wednesday.

The deal offer came 10 days after Musk first disclosed that he had become Twitter's largest shareholder. He has since been eclipsed by Vanguard Group.

The offer capped off a whirlwind 10-day period during which Musk revealed he had become the company's largest shareholder, accepted a position on the board only to ditch it, and tweeted throughout about how Twitter may be dying and should consider eliminating the "w" from its name, among other suggestions.

The company now appears to be prepping for what could be a drawn-out acquisition drama. Even so, there seem to be sincere doubts about whether Musk, a successful but sometimes erratic entrepreneur who ended up in hot water with regulators in 2018 after falsely suggesting that he had secured funding to take Tesla private, is serious about moving forward with the deal.

Despite being the richest man in the world, there are questions about how he would come up with the cash to finance the nearly $42 billion deal. Musk himself admitted in an interview Thursday that closing a deal would be challenging, saying, "I'm not sure I'll actually be able to acquire it."

Twitter's stock fluctuated a bit Thursday but remained mostly flat, closing around $45, well below Musk's offer price of $54.20 per share. The lack of enthusiasm — unusual after a takeover offer — suggests investor skepticism about the deal going through.

© Copyright 2022 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten. CNN and Associated Press contributed to this report.

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