The Twitter board uses the “Poison Pill” method – a limited-term shareholder rights plan to prevent Elon Musk’s take over. Twitter announced on Friday, that members of their board may acquire more shares at a cheaper price. This will allow others to either have more or equal to the shares Elon Musk currently owns. To have sole control, you must own about 15% of their stocks, Elon currently owns 9%.
This method is an anti-take-over mechanism for corporations to retain control of the company. It would mean that Elon will have to pay more to acquire more shares or to take over.
“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 without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders,” the company said in its statement.
The last offer Elon has made was to buy the remaining shares at $54.20 per share bringing the valuation to $41.4 billion. This is 18% higher than the actual valuation when markets closed Wednesday. Currently, Vanguard Group became the highest shareholder of the company.
In his TED talk interview, Elon Musk presented his reasons why he would like to acquire the platform. He wanted it to be a place where people could speak out without algorithms blocking their tweets. He did say that he is doing it because he believes “it is the future” of society. There are changes he would like to implement to improve the platform he tweeted was “dying”.
This begins a series of events as people watch the takeover of Twitter.