Twitter has introduced an investor policy that could prevent Tesla leader Elon Musk from gaining control of the company.
Twitter Creates “Poison Pill” Plan
On Friday, Twitter’s board of directors approved a plan that would allow shareholders to buy stock at a discount, thereby diluting the value of holdings purchased by newer investors such as Musk.
Media outlets have called this plan a “poison pill,” though Twitter has termed it a limited-duration shareholder rights plan.
The plan will “reduce the likelihood that [anyone] gains control of Twitter” without paying control premiums or gaining the approval of its board. It comes into effect if a single entity gains ownership of more than 15% of Twitter’s outstanding common stock.
The plan does not prevent Twitter’s board from engaging with acquisition proposals if it sees fit to do so.
Twitter did not name Musk in its statement, but referred to an “unsolicited, non-binding proposal to acquire Twitter” that could only have come from Musk given the events of this week.
Musk Wants to Reform Twitter
On Monday, Musk bought 9.2% stake in Twitter and became its largest stakeholder. Initially, it appeared that Musk would join Twitter’s board of directors, but he later agreed not to do so.
Days later, Musk offered to buy Twitter for $43 billion at $54.20 per share. The company’s stock is currently priced at $45.08.
Musk has expressed the goal of changing Twitter’s business model, reforming its policies around free speech, and having the company accept cryptocurrencies such as Dogecoin (DOGE).
The potential buyout has seen plenty of backlash due to Musk’s wealth. Dogecoin founder Jackson Palmer has condemned the idea, stating that it takes “pretty impressive mental gymnastics” to believe that the takeover would improve freedom on the platform.
However, support for Musk has also been seen within the cryptocurrency industry. Sam Bankman-Fried of FTX has said he would be “excited” to help Musk with Twitter and blockchain.
Justin Sun, former CEO of TRON, has also said that he “fully support[s] the reform initiatives of [Elon Musk].” Sun also said that he is making a competing offer to buy Twitter at $60 per share, though this would presumably be blocked by the “poison pill” as well.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.