Twitter adopts 'poison pill' to block Elon Musk takeover bid

Twitter is trying to stifle Elon Musk.

On Friday, the social media company unrolled a defense against Musk's unwelcome takeover bid, introducing what is known as a poison pill to fend off Musk's $43 billion acquisition attempt.

The maneuver, formally called a shareholder rights plan, essentially allows current shareholders to acquire more stock in the company at a discount, presenting Musk with a unwelcome "pill," meaning his shares would become diluted and his purchase would become more expensive. It would require that Musk negotiate directly with Twitter's board on any purchase attempt.

The poison pill will take effect once a person or entity acquires 15% or more of Twitter's shares, according to an announcement from Twitter's board of directors, which noted the plan will be in place until next April.

Musk holds about 9% of Twitter's stock, but he has made an offer to buy the company outright.

With the poison pill plan now in place, Twitter is preemptively defending itself against the possibility of Musk upping his stake in the company.

"The poison pill puts a temporary roadblock in front of Musk going forward," said corporate governance expert Edward Rock, who teaches at New York University's School of Law. "It gives the board a chance to evaluate the bid, whether it makes sense to sell the company, and if they are going to sell the company, whether it makes sense to sell the company to him."

Musk did not return NPR's request seeking comment. Speaking at a conference on Thursday, Musk said he has a "Plan B" if his takeover attempt was not successful, but he did not elaborate.

Twitter said the plan is aimed at enabling investors to "realize the full value of their investment" by making it less likely that Musk would still be interested in a hostile takeover.

Under the terms of the plan, Twitter can still engage with parties interested in buying the company, or even accept an acquisition proposal, if a bid is in the "best interests" of the company and its shareholders.

Rock, of NYU Law, said Musk will show he is serious about buying Twitter if one of two things happens: He shows how exactly he plans on financing the takeover, since Musk did not reveal that in his Securities and Exchange Commission filing, or he launches a proxy contest to try to replace members of Twitter's board in response to the poison pill plan.

"Absent that, he's not going to acquire the company," Rock said. "And people can just write it off like some of his other Twitter storms."

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