A day after billionaire Musk made a $43 billion offer to buy the platform, the board of the micro-messaging service has put itself in a strong position.
It has adopted a limited-duration shareholder rights plan.
Anyone who has more than 15% of the company will not be allowed to.
It allows others to buy additional shares at a discount.
The defence plan was put out by the board because of Mr Musk's proposal to acquire the company.
A poison pill is one of the last lines of defence against hostile takeovers, according to Josh White, a former financial economist for the Securities and Exchange Commission.
He said that they call it the nuclear option.
The poison pill was put in place because Mr Musk was not willing to negotiate a higher price.
If the end game is to acquire the company, it might not be the right approach according to Mr White.
The plan will end on April 14 next year.
The company was not being held hostage by the offer according to the CEO.
Mr Musk said at the conference that he was not sure if he would be able to acquire it.
Mr Musk has a 9.2% stake in the company, but he is not the largest shareholder. The funds of the firm now have a 10% stake.
Mr Musk said at the event that he believed that the platform was limiting freedom of speech. He said his main motivation would be to expand free speech.
Morgan Stanley is advising Mr Musk. Goldman and JP Morgan are helping with the development of the micro-blogging site, according to the report.
All Rights Reserved © 2024
