Twitter adopts 'poison pill' to fight Elon Musk takeover

New Delhi: Late Friday evening, Twitter's board of directors confirmed that the 'poison pill' protection will be activated to prevent Tesla CEO Elon Musk from taking over the company. Following a "unsolicited, non-binding bid to purchase Twitter," the company's Board of Directors unanimously authorised a limited-term "shareholder rights plan," or the "Rights Plan."

If Musk tries to take over the company, the Rights Plan will allow some owners to buy more shares. According to a press release from Twitter's board, the 'Rights Plan' will reduce the chances of an organisation or individual gaining control of the microblogging platform "through open market accumulation without paying all shareholders an appropriate control premium or providing the Board with sufficient time to make informed judgments."

"The rights will become exercisable under the Rights Plan if an entity, person, or group acquires beneficial ownership of 15% or more of Twitter's outstanding common stock in a transaction not approved by the Board," Twitter's board stated in the release.

This Rights Plan will be in effect for one year, ending on April 14, 2023.

The report comes just days after Twitter CEO Parag Agarwal told staff during a Q&A session on Thursday that the firm's board will not be "kept captive" by news of Musk's plans to buy the company. He also stated that the board of directors of Twitter was considering Musk's offer and will make a decision "in the best interests of our shareholders."

"It would be totally indefensible not to bring this offer to a shareholder vote," Musk tweeted ahead of the meeting. In answer to a question about the prospect of Twitter's board rejecting his offer, he said, "They control the firm, not the board of directors."

Musk has made a bid to buy Twitter for $54.20 per share in cash, valuing the firm at roughly $43 billion.