Tesla CEO Elon Musk wanted to buy Twitter for 43 billion. The Twitter board then passed the ‘Poison Pill’ to protect the rights of shareholders. It is implemented with the consent of all board members. This bill will be expired in April 14, 2023.
The Poison Pill refers to a defense strategy that creates an unfavorable situation for such an individual or company wishing to make an acquisition. Acquisition of certain institutions is discouraged by creating unfavorable conditions. Adverse situations are created in many ways. The acquirer uses this strategy to make the organization less attractive to the individual or company.
While this is not the best way to protect a company from acquisition, it is quite effective. This means that the Twitter board does not want Elon Musk to take over Twitter easily. So they have taken defensive measures.
The person or company wishing to acquire due to such a plan has to protect the interests of all the shareholders of that organization, pay more in the name of premium etc. In addition, the board may take more time to protect the rights of shareholders. Elon Musk now faces similar adversity. But Twitter also said the board members could support the acquisition if it protects everyone’s interests.
Elon Musk still owns 9 percent of Twitter. Twitter invited him to attend the board meeting, but he refused. The reason for the rejection is that if he had attended the meeting, he would not have received more than 14.9 per cent of the stock shares under the Beneficial Owner Act. Musk said he was not sure if he would be able to buy Twitter after the incident, but that he had enough money.