Hostile takeovers are not new to the world. In the past, several companies have been subjected to it. But it seems Twitter does not want to go through it.
After billionaire Elon Musk made a bid to take over the platform, the board of directors of the firm is not likely to take it, The Information reported on Thursday.
The company seems to have been thinking about using ‘poison pill’ protocol to kill the attempt, said another report.
As per the expectation, Twitter moved to defend itself against hostile takeover bid on Friday. The firm announced the plan to let shareholders purchase additional stock.
In a statement, Twitter, said, “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.”
What is ‘poison pill’ or ‘Rights Plan’ tactic?
According to the strategy, the social microblogging site can activate its shareholder’s rights plan. It can help in turning the hostile takeover into an expensive and complex process, ‘The New York Times’ reported citing sources.
Also Read: Elon Musk not sure of Twitter acquisition, has a Plan B, calls SEC ‘bastards’
When the plan gets activated, the shareholders get the right to buy additional shares at a discounted rate, said the report.
The tactic helps to avoid hostile takeovers as it dilutes the stake of an acquirer by creating surplus shares in the market. It tends to create a “pill”, which makes a takeover too hard to go for financially.
So, it would eventually reduce ownership interest of the Tesla CEO Elon Musk.
The offer
On Thursday, the Twitter board met to discuss the takeover bid of the billionaire. According to a regulatory filing, billionaire Elon Musk had made an offer of $41.39 billion to buy the company. He has offered a price of $54.20 per share.
Watch: Twitter not held hostage by Elon Musk offer: CEO Parag Agrawal
Musk’s relationship with this social media platform is quite long. After holding numerous polls on it, the Tesla CEO had recently suggested a raft of changes for the platform. He was also going to join its board of directors but later abandoned the plan. Elon Musk was also reportedly sued by the shareholders of Twitter.
In a letter to Twitter Chairman Bret Taylor, Musk, said, “Since making my investment, I now realise the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.”
(With inputs from agencies)
