Not so fast Elon! Last Friday, Twitter’s (TWTR) board of directors voted unanimously on a move to block Elon Musk’s proposed takeover of the social media company.
Should Musk attempt to purchase at least 15% of the company, all of Twitter’s other shareholders (excluding Musk) would be granted the right to purchase additional shares at a heavily discounted price, thus diluting the value of shares and Musk’s ownership.
The strategy, which is formally known as a “shareholder rights plan” and informally as a “poison pill”, is commonly used by corporations to stop hostile takeover bids.
Musk isn’t the only one with a sudden interest in buying Twitter though. According to sources, private equity firm Thomas Bravo LP is putting together an acquisition bid for Twitter to rival Musk’s $43b bid.
Why it matters
All publicity is good publicity, right? Between a judge's ruling that Elon's tweet about taking Tesla (TSLA) private was misleading, his 9% stake in Twitter, and his $43b offer to acquire the company, Musk and Twitter have made no shortage of headlines recently. The news has given new life to Twitter stock, which is up by around 5% for the year.