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Twitter board announces ‘poison pill’ to block Elon Musk buyout bid

A press release issued Friday says the Twitter board’s action follows an “unsolicited, non-binding proposal to acquire Twitter.”

Twitter's Board of Directors countered Tesla CEO billionaire Elon Musk’s buyout proposal this week with what it calls a “shareholder rights plan” that grants some shareholders the right to purchase more stock in the event of any outside attempt to gain control of the company.

This type of action is known widely among Wall Street investors as a “poison pill.”

IMAGO/NurPhoto

IMAGO/NurPhoto

Twitter says the plan would enable all shareholders to “realize the full value of their investment in Twitter.”

The press release states, “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.”

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Specifically, the plan provides for the action to be triggered if a person or group acquires 15% or more of Twitter stock “in a transaction not approved by the Board.”

The New York Times tweeted today that "Twitter rebuffed Elon Musk’s takeover bid with a so-called poison pill that would flood the market with new shares if he buys 15% of its stock. Musk currently owns more than 9%."

Twitter was careful to state that it is not prevented from negotiating or accepting an acquisition proposal if it believes it would be a beneficial arrangement.

Musk announced a bid earlier this week to buy Twitter outright for $43 billion.

Twitter (TWTR) shares closed Thursday at $45.08 on the New York Stock Exchange (NYSE). The market was closed for trading today in observance of Good Friday.

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