Twitter Deploys 'Poison Pill' Strategy To Fend Off Elon Musk: What Does It Mean?

Twitter's response to Elon Musk's attempted hostile takeover makes it clear that the company doesn't want SpaceX founder as its owner.

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What's a poison pill?

To fend off Elon Musk's unwelcome takeover attempt, Twitter is using the power of a "poison pill." Formally, a poison pill is known as shareholder rights plan - giving current shareholders the power to acquire more stock in a given company at a discount.

Reuters

This would be a "poison pill" for Musk's Twitter-flavoured ambitions, for it would dilute his shares, making his potential purchase of Twitter expensive and less attractive. Now, Musk would have to deal with Twitter's board directly if he wishes to buy the company.

What will happen next??

As soon as a person or an entity acquires 15% or more of Twitter's shares, the poison pill will take effect. According to an announcement from Twitter's board of directors, the plan is ought to last until next April.

AFP

Currently, Elon Musk is Twitter's largest individual shareholder - with 9% of company stock. In case he were to consider increasing his stake in the company, the poison pill would act as a defence.

Also read:?Twitter Intends To Fight Elon Musk's Hostile Takeover Attempt: What Could Happen?

In essence, a poison pill gives Twitter's board more time to assess the bid and see whether selling the company to Musk is a good idea at all.

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This doesn't mean Musk is backing down. At a conference in Vancouver on Thursday, Musk said that he a has a "Plan B" to continue pursuing Twitter's ownership if his takeover attempt fails.

Also read:?This Journalist Talks About The Time Elon Musk Offered To Buy His Company And How They Responded

Now, Musk has two options - to either prove how he intends to sustain Twitter's takeover, or facilitate the replacement of Twitter's board members.

What do you think about Twitter's poison pill against Elon Musk? Let us know in the comments below.?For more in the world of?technology?and?science, keep reading?Indiatimes.com.?