Twitter adopts 'poison pill' to block Elon Musk takeover

• Twitter has enacted a "poison pill" measure to make it harder for shareholders to aquire additional stake in the company.
• The measure is in response to Elon Musk's bid to aquire the company, a move that has been deemed "unsolicited."
• The measure is meant to protect smaller shareholders while deterring takeover attempts.

The company announced on Friday that it is going to put in place a shareholder rights plan in order to block Musk's attempt to acquire the company.

The plan would allow other shareholders to purchase additional shares at a lower price in order to reduce Musk's stake in the company. If an individual investor purchases more than 15% of the common stock without board approval, their rights will be exercised. It makes a potential takeover less desirable.

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 press release states that the board is still able to accept acquisition proposals if they believe they are best for the company. However, that appears to be not the case with Musk.

RECOMMENDED VIDEOS FOR YOU...

Musk bought 10% of the stock of the company, making him the largest shareholder. He wouldn't join the company's board because he wouldn't be allowed to own more than 14.9% of the company's stock. Then, in a surprise move, the CEO of the company placed a bid on Thursday to purchase all of the stock.

Immediately following his offer to buy the company, Musk explained in an interview that he wanted to turn it into an inclusive arena for free speech.

The poison pill would make it more expensive for Musk to purchase the micro-messaging service. However, Musk admitted that he is not sure if he will be able to acquire the company, stating that he has a plan B.