A day after billionaire Musk offered to buy the company for $43 billion, the company adopted a limited duration shareholder rights plan.
The plan was unanimously adopted by the board.
If any person or group acquires beneficial ownership of at least 15% of the outstanding common stock without the board's approval, other shareholders will be allowed to purchase additional shares at a discount.
The plan will end on April 14, 2023.
It's a common way to repel a hostile takeover by reducing the stake of the entity.
The Rights Plan will reduce the likelihood that any entity, person or group gains control of the company without paying all shareholders an appropriate control premium or giving the Board enough time to make informed decisions.
The board can accept an acquisition offer if it is in the best interests of the company and its shareholders.
Last week, Musk disclosed in a Securities and Exchange Commission filing that he already owns 9% of the company. Musk was going to join the board after his stake became public. Musk decided not to join the board after all.
Musk would not be allowed to accumulate more than 14.9% of the company's outstanding common stock if he had joined.
In a live-streamed interview at the TED2022 conference in Vancouver on Thursday, Musk laid out his vision for making Twitter's algorithm more publicly accessible and limiting content moderation.
He acknowledged that he is not sure if he will be able to buy the company, though he said he has enough money to do it. Musk has a lot of his assets tied up in equity in his companies, meaning he would likely have to liquidate or borrow against his assets to come up with a large sum.
There is a developing story. You can check back for updates.
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