A Finance Expert Explains The ‘Poison Pill’ The Anti-Takeover Tool That Twitter Hopes Will Keep Elon Musk At Bay
Takeovers are usually friendly affairs. Corporate executives engage in top-secret talks, with one company or group of investors making a bid for another business. After some negotiating, the companies engaged in the merger or acquisition announce a deal has been struck.
But other takeovers are more hostile in nature. Not every company wants to be taken over. This is the case with Elon Musk’s US$43 billion bid to buy Twitter.
Companies have various measures in their arsenal to ward off such unwanted advances. One of the most effective anti-takeover measures is the shareholder rights plan, also more aptly known as a “poison pill.” It is designed to block an investor from accumulating a majority stake in a company.
Twitter adopted a poison pill plan on April 15, 2022, shortly after Musk un...