Twitter Rebuffs Elon Musk’s $43 Billion Offer With a ‘Poison Pill’. Here’s What It Means

San Francisco/New Delhi: Social media giant, Twitter on Friday adopted a shareholder rights plan, also known as a ‘poison pill,’ on Friday in response to billionaire Elon Musk’s offer to buy the company for $43 billion. So what does a ‘poison pill’ mean? Take a look here.Also Read – I Reject This Offer: Elon Musk And Saudi Prince, Investor in Twitter, Spar Over Takeover

The poison pill strategy lets Twitter flood the market with new shares or allows existing shareholders, other than the bidder, to buy them at a discount, according to The New York Times. Once an individual or group of people working together buy 15% or more shares, anyone trying to acquire the company must negotiate directly with the board, according to The New York Times. Also Read – Twitter Not ‘Held Hostage’ by Elon Musk’s Offer to Buy It: CEO Parag Agrawal to Company Staff

Twitter’s plan would take effect if Musk’s current 9% stake in company grows to 15% or more. Even then, Musk could still take over the company with a proxy fight by voting out the current directors. Twitter said the plan doesn’t prevent the board from engaging with parties or accepting an acquisition proposal if it’s in the company’s ‘best interests, reported news agency AP. Also Read – Elon Musk Offers to Buy Twitter for USD 41 Billion, Board To Meet Soon | Here’s What We Know

Twitter said the move aims to enable its investors to “realize the full value of their investment” in the company by reducing the likelihood that any one person can gain control without paying shareholders a premium or giving the board more time.

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On April 4, a regulatory filing revealed that Musk, the billionaire chief executive of Tesla and SpaceX and the world’s richest man, had bought a 9.2 per cent stake in Twitter. The next day, Twitter announced that Musk would join its board but by the end of the week he rejected the offer.