Twitter’s “Poison Pill” Plot to Stop Elon Musk Explained – Following Tesla CEO Elon Musk’s purchase of 9.2% of Twitter stock and his subsequent offer to purchase the company at a price of $54.20 per share, Twitter’s board adopted a “poison pill” strategy to prevent Musk from taking over the company.
The so-called “poison pill” option was implemented a day after Musk made his company. Twitter’s board unanimously voted in favor of the strategy, supposedly over fears that Musk would end “content moderation” practices on the platform that many say favor liberals and discriminate against conservatives.
What Is A “Poison Pill”
The term “poison pill” refers to suicide polls used by military troops and spies who fear being captured by enemy forces. In this case, the poison pill doesn’t mean that Twitter will shut down before it accepts a takeover from Musk but does mean that the company’s board intends to make it difficult for Musk to buy the company at a reasonable price.
The strategy was developed in the 1980s by mergers and acquisitions lawyer Martin Lipton at a time when major companies were at a larger risk of hostile takeovers.
When the poison pill strategy is adopted, a company’s board will aim to make purchasing the entire company a less attractive option for an interested buyer. It gives existing shareholders the ability to purchase more shares of the company at a reduced price and blocks the interested buyer from purchasing shares at the same price.
If musk surpasses 15% of Twitter shares – a similar threshold to the 15.9% that the Twitter board attempted to cap Musk at when he first expressed interest in joining the board – the poison pill will be triggered and other shareholders may purchase more shares at a discounted rate.
In normal circumstances, a move like this could discourage an investor looking to make as much money as possible, but Musk said during a TED Talk interview on Thursday that he doesn’t care about making money from Twitter.
“I think it’s very important for there to be an inclusive arena for free speech. Twitter has become kind of a de facto town square, so it’s really important that people have both the reality and the perception that they are able to speak freely within the bounds of the law,” Musk said about his intentions.
“This is just my strong, intuitive sense that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization…I don’t care about the economics at all,” he added.
Twitter may be able to disincentivize Musk but may not be able to block him (and others) from buying the company.
Musk Has a Plan B
During the same TED2022 conference interview on Thursday, Musk said that it’s possible he won’t be able to buy the company but that he does have a “plan B” in place if Twitter rejects his offer.
Some have speculated that Musk may be able to influence Twitter’s direction by getting others to join him in investing in the company. Among those rich enough to join Musk in buying out Twitter is tech billionaire and Musk’s old friend, Peter Thiel.
Fellow billionaire Mark Cuban joined speculation about Thiel joining Musk, tweeting on Thursday that such a move would make the world “lose their sh*t.”
“Want to see the whole world lose their shit ? Get Peter Thiel to partner with Elon and raise the bid for Twitter,” Cuban wrote.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.