Twitter adopts ‘poison pill’ as challenger to Musk emerges

© Reuters. Elon Musk’s twitter account is seen on a smartphone in front of the Twitter logo in this photo illustration taken, April 15, 2022. REUTERS/Dado Ruvic/Illustration

(Reuters) -Twitter Inc on Friday adopted a limited-duration shareholder rights plan to protect itself from billionaire entrepreneur Elon Musk’s $43 billion cash takeover offer.

Musk made the bid on Wednesday in a letter to the board of Twitter- the micro-blogging platform that has become a global means of communication for individuals and world leaders – and it was made public in a regulatory filing on Thursday.

After his TED talk on Thursday, Musk hinted at the possibility of a hostile bid in which he would bypass Twitter (NYSE:TWTR)’s board and put the offer directly to its shareholders, tweeting: “It would be utterly indefensible not to put this offer to a shareholder vote.”

Under the plan, also known as a ‘poison pill’ strategy to resist a bid from a potential acquirer, the rights will become exercisable if anyone acquires ownership of 15% or more of Twitter’s outstanding common stock in a transaction not approved by the Board.

The rights plan will expire on April 14, 2023, Twitter said.