Article by Emel Akan from our premium news partners at The Epoch Times.
If any business, person, or group acquires 15 percent or more of Twitter’s outstanding common stock through a transaction not allowed by the board, according to the announcement, other stockholders will be able to purchase additional shares of stock at a discount price.
The plan expires on April 14, 2023. The company is expected to announce the details of the plan including the discount rate in a filing with the U.S. Securities and Exchange Commission soon.
The poison pill technique, also known as a shareholder rights plan, is used as a defense strategy by a target firm to prevent or discourage a potential hostile takeover.
The term “poison pill” comes from the time of wars and espionage when spies carried poison tablets. If they feared they were going to be detected, spies would take these pills to avoid being questioned by the enemy.
Martin Lipton, a famous mergers and acquisitions lawyer, developed this strategy in the 1980s when corporate takeovers were becoming increasingly widespread.
When a corporation is threatened with a takeover, it may employ the poison pill method to make itself less attractive to the potential buyer by raising the cost of acquisition and creating strong disincentive.
The method provides existing shareholders the option to buy additional shares at a lower price, thus diminishing a new, hostile party’s ownership stake.
If Musk reaches 15 percent ownership, the poison pill will be triggered. This will allow other shareholders to buy stock at a discount. Musk will be the sole shareholder who will be unable to acquire these cheaper shares.
This will make the billionaire’s acquisition of the firm more expensive and difficult. Musk currently owns over 9 percent of the company’s stock.
The use of a poison pill does not always imply that the company is unwilling to be bought. The board of directors of the company may be using it as a tactic to boost the offer price.
In the statement, Twitter said that the board will accept an offer if “it is in the best interests of Twitter and its shareholders.”
However, the use of poison pills by the board could come at a significant cost to the company and its shareholders.
It could hurt the share price of the company and discourage future investors. Institutional investors, in particular, are hesitant to invest in companies that employ such aggressive defense tactics.
Shareholders may also sue the company’s board for rejecting an attractive offer and failing to act in their best interests.
In response to a report that the business was considering adding a poison pill clause, Musk stated on Twitter that the move could expose the board to a “titanic” amount of liability because they would be “breaching their fiduciary duty.”
The board of Twitter includes Bret Taylor, co-CEO of Salesforce; Parag Agrawal, Twitter’s CEO; Jack Dorsey, Twitter’s co-founder; and Mimi Alemayehou, a senior vice president at Mastercard.
According to corporate lawyers, poison pills can be quite successful in discouraging a takeover, but they are generally not the first choice in defending the company. This is because the plan can fail if the acquirer is persistent. It may also end up harming the company.
Musk earlier said he’s “not sure” if he will be successful in acquiring Twitter.
“My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said at the TED2022 conference on April 14 in Vancouver.
“I don’t care about the economics at all,” he said.
When asked if he had a “Plan B” in case his offer is rejected, Musk replied, “There is.”
Zachary Stieber contributed to this report
Yes, We Need Your Help
I hate being “that guy” who asks people to donate because I think our conservative news network is so crucial, but here I am…
When I left my cushy corporate job in 2017, I did so knowing that my family would have to make sacrifices. But I couldn’t continue to watch the nation slip into oblivion and was inspired by President Trump’s willingness to fight the good fight even at his own personal expense. What I didn’t realize then is that conservative media would be so heavily attacked, canceled, and defunded that the sacrifices would be extreme.
Many in this nation are struggling right now even though we weren’t struggling just a few years ago. I’m not alone. But I wake up every morning and operate the sites we’ve been able to build because there’s really no other choice. I refuse to be beholden to Big Tech like so many other conservative news outlets, which is why you won’t see Google ads here. With that said, it’s often challenging to pay the bills and it’s even harder to expand so we can get the America First message out to a wider audience.
The economic downturn has forced me to make a plea for help. Between cancel culture, lockdowns, and diminishing ad revenue, we need financial assistance in order to continue to spread the truth. We ask all who have the means, please donate through our new GiveSendGo. Your generosity is what keeps these sites running and allows us to expand our reach so the truth can get to the masses. We’ve had great success in growing but we know we can do more with your assistance.
We currently operate:
- NOQ Report
- Conservative Playlist
- Uncanceled News
- Based Underground
- Truth Based Media
- Five other conservative news sites
I would even be willing to entertain investments and partnerships at this stage. I’ve turned them down in the past because editorial purity is extremely important. I’ll turn them down again if anyone wants us to start supporting RINOs or avoid “taboo” topics like voter fraud, vaccines, or transgender supremacy. But I’d talk to fellow America First patriots who want to help any (or all) of our 10 news sites. Hit me up at jdrucker (at) substack (dot) com if you’re interested.
For those who have the means and just want to help keep the mission of spreading a conservative, Christian message to the nation, please consider a generous donation.
All ORIGINAL content on this site is © 2021 NOQ Report. All REPUBLISHED content has received direct or implied permission for reproduction.
With that said, our content may be reproduced and distributed as long as it has a link to the original source and the author is credited prominently. We don’t mind you using our content as long as you help out by giving us credit with a prominent link. If you feel like giving us a tip for the content, we will not object!
JD Rucker – EIC