⚫ Mahmud Hasan,Reporter:

In reaction to Tesla CEO Elon Musk's $43 billion buyout bid a day earlier, Twitter stated Friday that it has opted to implement a limited-term shareholder rights plan, known as a "poison pill," as the social media firm prepared to reject a potential hostile takeover.


The board of directors of Twitter overwhelmingly approved the shareholder rights plan, sometimes known as a "poison pill," which is typically used to stave against hostile takeovers by diluting the stock.


If any shareholder gets more than a 15% interest in Twitter without the board's consent, other shareholders will be able to increase their holdings at a reduced price under the new plan.

The plan is set to expire on April 14, 2023, and is "similar to previous programs enacted by publicly-owned corporations in analogous situations."

With the decision coming a day after Tesla billionaire Elon Musk made an unsolicited $43 billion bid to purchase Twitter and take it private, Twitter is plainly preparing to fight any unwanted acquisition.


The poison pill, however, will not preclude the board from approving a future takeover deal if it is assessed to be "in the best interests of Twitter and its shareholders."

"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 providing the Board with sufficient time to make informed judgments and take actions that are in the best interests of shareholders," according to a press release from the company.

Several Wall Street analysts recently downgraded the Twitter stock, saying that Musk's takeover proposal puts the firm in jeopardy. In the midst of a "full-blown Elon circus," Stifel became one of the first to offer a sell recommendation on Twitter shares, while KeyBanc analysts warn that the deal might "go up in flames" and a potential sell-off if Musk decides to cash out.