It is basically an attempt to stop a hostile takeover.
The Twitter board of directors adopted what is called a poison pill to stop Elon Musk from increasing his stake in the company after he offered to buy it.
The poison pill will make it hard for him to own more than 15%:
Poison pills, also called shareholder-rights plans, are legal maneuvers that make it hard for shareholders to build their stakes beyond a set point by triggering an option for others to buy more shares at a discount. They are often used by companies that receive hostile takeover bids to buy themselves time to consider their options.
Twitter Inc. said in a statement that the rights plan doesn’t prevent the company from engaging with potential acquirers or accepting a takeover bid if the board determines it is in the best interest of shareholders.
The board also said the plan will “reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
The plan expires on April 14, 2023.
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