What anti-takeover strategy did Twitter’s board adopt after Musk’s April 2022 offer? It adopted a poison pill, formally known as a shareholder rights plan. Twitter announced the measure on April 15, 2022, one day after Musk disclosed his unsolicited offer to buy the company.
Under the plan, if an investor acquired more than a specified threshold of Twitter stock, other shareholders could receive rights to buy additional shares at a discount. That would dilute the unwanted investor’s stake and make a hostile takeover much more expensive. The strategy was designed to give the board time to evaluate alternatives rather than permanently prevent a transaction.
The plan was not the same as a white knight, in which a friendly bidder rescues a company, or a proxy fight, in which investors contest control through shareholder votes. It also had nothing to do with executive severance, which is associated with a golden parachute. Twitter’s board later negotiated directly with Musk, and the poison pill was rendered unnecessary when the company agreed to his acquisition terms.