Twitter’s board on Friday announced that a person or entity buying at least 15 percent of Twitter’s outstanding stock without approval would trigger the poison pill, which enables other stockholders to buy shares at a lower price.
The move was made “to protect stockholders from coercive or otherwise unfair takeover tactics,” Twitter said in filings Monday with the U.S. Securities and Exchange Commission.
“In general terms, it works by imposing a significant penalty upon any person or group that acquires 15 percent or more of the shares of common stock without the approval of the board,” the company said.
That may make it more difficult for a party or parties to buy the company without approval but should not interfere with an offer that is approved by the board, according to the filings.
The company also revealed more details of the provision.
It would allow each stockholder to buy one 1,000th of a share for each share they own, with each 1,000th of a share costing $210.
The option was set to take effect on April 25 and will remain in place until at least April 14, 2023.
Musk extended the offer after snapping up nearly 10 percent of the company.
Musk said he invested in Twitter because he believed in “its potential to be the platform for free speech around the globe” but had come to realize that the company “will neither thrive nor serve this societal imperative in its current form.”
“Twitter has extraordinary potential. I will unlock it,” he wrote in a letter to Bret Taylor, chairman of Twitter’s board.
Twitter later described the offer as “unsolicited” and “non-binding” but also suggested it would accept an offer if members ascertained it was “in the best interests of Twitter and its shareholders.”
Besides Taylor, co-CEO of Salesforce, the 11-member board includes Twitter CEO Parag Agrawal, former Twitter Executive Chairman Omid Kordestani, and Twitter co-founder Jack Dorsey.
The latter, whom Agrawal replaced in 2021, is set to to step down from the board soon.
Dorsey wrote on Twitter over the weekend that the board has been plagued by dysfunction.
Musk, meanwhile, took notice of Twitter users pointing out that other than Dorsey, members own few Twitter shares and some have never posted on the platform. Still, members receive around $275,000 a year for their positions.
“Board salary will be $0 if my bid succeeds, so that’s $3M/year saved right there,” Musk wrote on the platform.