Twitter Plays the “Poison Pill” to Prevent Elon Musk From Buying the Company
L_Hall91 | Apr 15, 2022 |
Elon Musk’s “hostile takeover” of Twitter hit a roadblock today as the board introduced a “poison pill” to stifle the purchase.
Twitter released a statement adopting a “Limited Duration Shareholder Rights Plan” to prevent Elon Musk from owning more than 15% of Twitter shares.
The “poison pill” will be in place for one year until April 14, 2023, and states, “the rights will become exercisable 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.”
“In the event that the rights become exercisable due to the triggering ownership threshold being crossed, each right will entitle its holder (other than the person, entity or group triggering the Rights Plan, whose rights will become void and will not be exercisable) to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.”
Cameron Winklevoss, the creator of ConnectU who had a legal battle with Mark Zuckerberg over the creation of Facebook, tweeted:
If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty.
The liability they would thereby assume would be titanic in scale.
— Elon Musk (@elonmusk) April 14, 2022
To which Elon Musk replied, “If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty. The liability they would thereby assume would be titanic in scale.”
Shareholders may yet decide what course of action to take if the board’s decision breaches their “fiduciary duty.”
Fiduciary
Responsibility https://t.co/O0HjLWBwL7— Poison Pill Poso (@JackPosobiec) April 15, 2022
