Twitter has made a move that could prevent Elon Musk from taking over the social media platform and taking it private.
It is being called a “poison pill” but it is, in reality, a “limited duration shareholder rights plan,” The Associated Press reported.
Twitter announced the move in a news release on Friday, CNN reported.
Twitter said it will allow investors to “realize the full value of their investment.” It will also make sure that one person could easily get control of Twitter without paying shareholders or giving the board more time to consider a deal.
Usually, it is used against hostile takeovers.
Right now, Musk owns about 9% of the company’s shares, but the “poison pill” would go into effect if he were to own 15% or more.
>>Previous coverage: Elon Musk offers to buy Twitter for $54.20 a share
When the plan is put into effect, and a person surpasses an arbitrary percentage point, in this case about 15%, others are able to buy more shares at a discount, The Wall Street Journal reported.
However, the business move isn’t foolproof and may not fully block Musk from acquiring the company.
Musk could still call to vote out the current board of directors. It also allows the current board to make a deal if it is in Twitter’s “best interests,” the AP reported.
The Tesla CEO had offered more than $43 billion to buy Twitter, with the intent of taking it private and building back trust among users.
He had called the $54.20 per share pledge his best and final offer, The Wall Street Journal reported.
“I believe free speech is a societal imperative for a functioning democracy,” Musk said in the Securities and Exchange Commission filing released by Twitter this week according to the AP. “I now realize the company will neither thrive nor serve this societal imperative in its current form.”
Musk said that Twitter should be more transparent, explaining how and why it promotes content, calling it a “de facto town square” during a TED conference in Vancouver on Thursday, The Wall Street Journal reported.
He said he did not care about making money on the deal, only to be able to take the company back to the private sector.
Twitter filed to become a public company in September 2013.
We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.
— Twitter (@Twitter) September 12, 2013
Its initial public offering came in on Nov. 7, 2013, with an IPO of $26 a piece. Trading opened at $45.10 and closed at $44.90 that day, according to Fox Business. Twitter was launched on July 15, 2006.
Musk had started buying Twitter stock in batches nearly every day since Jan. 31, the AP reported.
Musk had declined a spot on Twitter’s board that would have come with the condition that he would not buy more than 14.9% of the company.
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