Twitter says poison pill makes 'coercive' takeover difficult

DETROIT (AP) — Twitter's board of directors says it adopted a so-called “poison pill” defense in order to protect the social media platform from “coercive or otherwise unfair” takeover tactics.

The company announced the move Friday and provided more details in a regulatory filing early Monday. On Thursday, Tesla CEO Elon Musk disclosed an offer to buy the company for $43 billion, or $54.20 per share. He now owns about 9% of Twitter shares.

In a filing Monday with the U.S. Securities and Exchange Commission, Twitter's board says the shareholder rights agreement would impose a “significant penalty” on any person or group of investors who acquire 15% or more of the company's shares without board approval. The filing does not specifically mention Musk.

The rights agreement would give shareholders as of April 25 the right to buy one one-thousandth of a share of preferred stock for each common share they own, at a price of $210. The preferred stock would have the same voting rights as a common share. It would give existing shareholders more votes, making it harder for an investor to take control of the company.

“In general terms, it works by imposing a significant penalty upon any person or group that acquires 15% or more of the shares of common stock without approval of the board,” the filing says. The effect of the agreement may be to “render more difficult or discourage a merger, tender or exchange offer or other business combination involving the company,” the filing said.

Wedbush Securities analyst Daniel Ives said it was interesting that Twitter filed its “poison pill” plan before formally rejecting Musk’s offer, but he expects that rejection to come in the next 24 to 48 hours.

“Taking Twitter private at $54.20 should be up to shareholders, not the board,” Musk...