The board is discussing possible defense strategies against Tesla CEO billionaire Elon Musk's aggressive bid for social media platform Twitter valuing $43 billion. According to sources close to the subject, the Twitter Board may implement a "poison pill" strategy against Musk's proposal. The term poison pill refers to a defensive strategy used by a company buying it by a target firm to prevent or deter a potential hostile takeover. Potential targets use this tactic to make them appear less attractive to the potential collector. While they're not always the first and best way to defend a company, poison pills are often very effective. Poison pills effectively reduce a new, hostile party's ownership stake by giving existing shareholders the right to purchase additional shares at a discount.
Twitter and Tesla share price chart… Source: Bloomberg
Another option for the Twitter Board is to reject the offer as too low, according to a source. Collecting more than 9% of Twitter shares over time, Musk announced that his offer of $ 54.20 per share was his "best and last" offer. Twitter shares fell 1.7%, reflecting market sentiment that the offer would be rejected, suggesting that investors may be skeptical of the billionaire's offer. Musk's offer of $54.20 per share is 38% higher than the value of Twitter stock on the day before his investment was made public and 18.2% higher than Wednesday's closing price.
On April 4, Musk announced that he had bought Twitter shares and became its largest individual shareholder. With his $260 billion fortune, Musk is normally thought to have no trouble getting Twitter.
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