Following Elon Musk’s $43 billion takeover bid issued on Thursday morning, the board of directors at Twitter unanimously voted to approve a plan that could potentially limit how many shares the Tesla and SpaceX CEO could buy.
According to The Wall Street Journal, the company has adopted a "poison pill," which makes it difficult for Musk to increase his stake in the company past 15 percent. Currently, Musk owns just over 9 percent.
"Poison pills, also called shareholder-rights plans, are legal maneuvers that make it hard for shareholders to build their stakes beyond a set point by triggering an option for others to buy more shares at a discount. They are often used by companies that receive hostile takeover bids to buy themselves time to consider their options," The Wall Street Journal explained.
Twitter's board is now in breach of their fiduciary duty and as one of their largest shareholders, @elonmusk can and should sue them. And every other shareholder. Titanic liability. https://t.co/OujKtzFedK
— Poison Pill Poso (@JackPosobiec) April 15, 2022
According to CNBC, this plan is set to expire on April 14, 2023.
"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 press release.
The company noted that this plan would not prevent the board from accepting an acquisition offer if the board approves it and deems it in the best interests of the company and its shareholders.
The placement of the plan follows weeks of news between the business magnate and the social media giant.
At the beginning of the month, it was announced that Musk had purchased more than 9 percent of a stake in the company. Shortly after, Twitter CEO Parag Agrawal said that Musk would be joining the company’s board of directors.
On April 10 though, just days later, Agrawal announced that Musk would in fact not be joining the board of directors.
Then, just days later, Musk made the $43 billion unsolicited takeover bid, equating to $54.20 per share in cash.
Notably, Musk, who is a prominent and frequent user of the platform, has been silent since yesterday evening, after posting a screenshot of Goldman Sachs' Q4 review of Twitter, where it was given a 12-month sell price target of only $30.
. @ElonMusk hasn't tweeted since 6pm yesterday
— Poison Pill Poso (@JackPosobiec) April 15, 2022
His silence also came just after posting a poll asking users whether "Taking Twitter private at $54.20 should be up to shareholders, not the board."
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