Twitter Adopts ‘Poison Pill’ Defense to Thwart Musk Takeover
WASHINGTON — Twitter’s board of directors implemented a poison pill to block the potential hostile takeover of the social media company.
The board’s unanimous vote to deploy its so-called poison pill came the day after Elon Musk publicly made an unsolicited offer to buy the publicly-traded company for $43 billion and turn it private. Now, the board decided if Musk — who is the company’s largest shareholder — or anyone else attempts to buy more than 15% of the company’s stock without the board’s approval, the company will release more shares in the company.
That’s the company’s poison pill, also called its “Rights Plan,” which allows other Twitter stockholders to purchase stocks at a discount to thwart Musk’s hostile takeover.
“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 a statement.
This plan is in place for a year through April 14, 2023, allowing the company to vet Musk’s proposal in the interim.
“The Rights Plan does not prevent the board from engaging with parties or accepting an acquisition proposal if the board believes that it is in the best interests of Twitter and its shareholders,” the company said in its statement.
Twitter also previously promised to “carefully review the proposal to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders,” in a statement Thursday.
After making his bid to buy the company public, Musk spoke at the TED2022 conference where he said he would want to make Twitter’s algorithm public if he acquired the company.
That would allow people to “critique it,” Musk said. “What I mean is, I think the code should be on GitHub, you know, so people can look through it like, ‘I see a problem here.’ ‘I don’t agree with this.’ They can highlight issues, suggest changes.”
Social media companies’ algorithms, including Twitter’s, have come under more scrutiny in recent years, especially after Facebook whistleblower Frances Haugen linked the company’s algorithm to the spread of misinformation, an accusation she made while talking to the Senate last year.
Musk himself called Twitter’s algorithm a “black box” at Thursday’s conference, explaining that he wants people to be more informed about how decisions to promote or demote content in a user’s feed is made.
Madeline can be reached at [email protected]
We're proud to make our journalism accessible to everyone, but producing high-quality journalism comes at a cost. That's why we need your help. By making a contribution today, you'll be supporting TWN and ensuring that we can keep providing our journalism for free to the public.
Donate now and help us continue to publish TWN’s distinctive journalism. Thank you for your support!
