The Clap
A day after Elon Musk offered to buy Twitter for $43 billion, Twitter’s BoD announced a “poison pill”, a way for companies to defend against hostile takeovers.
Claps Class
A poison pill makes it more expensive for an acquirer to buy shares of the target company above a certain threshold.
The deets
In Musk’s case, Twitter’s common stock will be sold at a discounted price in the case Musk decides to purchase a 15% stake or more in the company without the board’s approval.
This move leads to an immediate dilution of the acquirer’s stake if they do decide to acquire 15% or more of the company. The poison pill plan will remain in effect until April 14, 2023.
