{"id":434899,"date":"2022-04-20T14:18:47","date_gmt":"2022-04-20T11:18:47","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/will-twitters-poison-pill-strategy-stop-elon-musks-hostile-takeover\/"},"modified":"2022-04-20T14:18:47","modified_gmt":"2022-04-20T11:18:47","slug":"will-twitters-poison-pill-strategy-stop-elon-musks-hostile-takeover","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/will-twitters-poison-pill-strategy-stop-elon-musks-hostile-takeover\/","title":{"rendered":"#Will Twitter\u2019s \u2018poison pill\u2019 strategy stop Elon Musk\u2019s hostile takeover?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3c80e020726\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3c80e020726\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/will-twitters-poison-pill-strategy-stop-elon-musks-hostile-takeover\/#%E2%80%9CWill_Twitters_%E2%80%98poison_pill_strategy_stop_Elon_Musks_hostile_takeover%E2%80%9D\" >&#8220;Will Twitter\u2019s \u2018poison pill\u2019 strategy stop Elon Musk\u2019s hostile takeover?&#8221;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/will-twitters-poison-pill-strategy-stop-elon-musks-hostile-takeover\/#Whats_a_poison_pill\" >What\u2019s a poison pill?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/will-twitters-poison-pill-strategy-stop-elon-musks-hostile-takeover\/#A_successful_tactic\" >A successful tactic<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CWill_Twitters_%E2%80%98poison_pill_strategy_stop_Elon_Musks_hostile_takeover%E2%80%9D\"><\/span>&#8220;Will Twitter\u2019s \u2018poison pill\u2019 strategy stop Elon Musk\u2019s hostile takeover?&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/img-cdn.tnwcdn.com\/image?fit=796%2C417&amp;url=https%3A%2F%2Fcdn0.tnwcdn.com%2Fwp-content%2Fblogs.dir%2F1%2Ffiles%2F2022%2F04%2FElontwitter.jpg&amp;signature=cc994de15f77a7ffc007ea060ab4247a\" \/><\/p>\n<div>\n                            Takeovers are <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/techcrunch.com\/2022\/04\/14\/what-hostile-takeovers-are-and-why-theyre-usually-doomed\/\">usually friendly affairs<\/a>. Corporate executives engage in top-secret talks, with one company or group of investors making a bid for another business. After some negotiating, the companies engaged in the merger or acquisition announce a deal has been struck.<\/p>\n<p>But other takeovers are more hostile in nature. Not every company wants to be taken over. This is the case with <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-04-14\/elon-musk-launches-43-billion-hostile-takeover-of-twitter?sref=Hjm5biAW\">Elon Musk\u2019s US$43 billion bid<\/a> to buy <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a>.<\/p>\n<p>Companies have various measures in their arsenal to ward off such unwanted advances. One of the most effective anti-takeover measures is the shareholder rights plan, also more aptly known as a \u201cpoison pill.\u201d It is designed to block an investor from accumulating a majority stake in a company.<\/p>\n<p>Twitter <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cbsnews.com\/news\/twitter-poison-pill-elon-musk\/\">adopted a poison pill<\/a> plan on April 15, 2022, shortly after <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.sec.gov\/Archives\/edgar\/data\/0001418091\/000110465922045641\/tm2212748d1_sc13da.htm\">Musk unveiled his takeover offer<\/a> in a Securities and Exchange filing.<\/p>\n<p>I\u2019m a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.loyola.edu\/sellinger-business\/academics\/departments\/finance\/faculty\/chuluun\">scholar of corporate finance<\/a>. Let me explain why poison pills have been effective at warding off unsolicited offers, at least until now.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Whats_a_poison_pill\"><\/span>What\u2019s a poison pill?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Poison pills <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/heinonline.org\/HOL\/LandingPage?handle=hein.journals\/intfinr3&amp;div=61&amp;id=&amp;page=\">were developed in the early 1980s<\/a> as a defense tactic against corporate raiders to effectively poison their takeover efforts \u2013 sort of reminiscent of the suicide pills that <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.wired.com\/2013\/04\/oh-those-movie-spies-and-their-cyanide-pills\/\">spies supposedly swallow if captured<\/a>.<\/p>\n<p>There are many <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.investopedia.com\/terms\/p\/poisonpill.asp\">variants of poison pills<\/a>, but they <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly increase the number of shares, which then dilutes the bidder\u2019s stake and causes them a significant financial loss.<\/p>\n<p>Let\u2019s say a company has 1,000 shares outstanding valued at $10 each, which means the company has a market value of $10,000. An activist investor purchases 100 shares at the cost of $1,000 and accumulates a significant 10% stake in the company. But if the company has a poison pill that is triggered once any hostile bidder owns 10% of its stock, all other shareholders would suddenly have the opportunity to buy additional shares at a discounted price \u2013 say, half the market price. This has the effect of quickly diluting the activist investor\u2019s original stake and also making it worth a lot less than it was before.<\/p>\n<p>Twitter adopted a similar measure. If any shareholder accumulates a 15% stake in the company in a purchase not <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roved by the board of directors, other shareholders would get the right to buy additional shares at a discount, diluting the 9.2% stake Musk recently purchased.<\/p>\n<p>Poison pills are useful in part because they can be adopted quickly, but they usually have expiration dates. The poison pill adopted by Twitter, for example, expires in one year.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_successful_tactic\"><\/span>A successful tactic<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Many well-known companies such as <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2018\/10\/22\/papa-johns-ex-ceo-schnatter-asks-board-to-amend-poison-pill-plan.html\">Papa John\u2019s<\/a>, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/money.cnn.com\/2012\/11\/05\/technology\/netflix-poison-pill\/\">Netflix<\/a>, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.dallasnews.com\/business\/retail\/2020\/01\/24\/jc-penney-amended-its-poison-pill-extending-it-to-2023\">JCPenney<\/a>, and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.barrons.com\/articles\/poisoned-pill-avis-tumbles-following-efforts-to-block-activist-guidance-1516135943\">Avis Budget Group<\/a> have used poison pills to successfully fend off hostile takeovers. And <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.kramerlevin.com\/en\/perspectives-search\/covid-19-pandemic-and-poison-pills.html\">nearly 100 companies adopted<\/a> poison pills in 2020 because they were worried that their careening stock prices, caused by the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.1016\/j.frl.2020.101690\">pandemic market swoon<\/a>, would make them vulnerable to hostile takeovers.<\/p>\n<p>No one <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/lawshelf.com\/coursewarecontentview\/poison-pills\/\">has ever triggered<\/a> \u2013 or swallowed \u2013 a poison pill that was designed to fend off an unsolicited takeover offer, showing how effective such measures are at fending off takeover attempts.<\/p>\n<p>These types of anti-takeover measures are generally frowned upon as a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/article\/us-dealtalk-poisonpills\/poison-pills-drop-to-lowest-level-in-20-years-idUSTRE62T5D320100330\">poor corporate governance practice<\/a> that can hurt a company\u2019s value and performance. They can be seen as impediments to the ability of shareholders and outsiders to monitor management and are more about protecting the board and management than attracting more generous offers from potential buyers.<\/p>\n<p>However, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/trace.tennessee.edu\/cgi\/viewcontent.cgi?article=3267&amp;context=utk_chanhonoproj\">shareholders may benefit from poison pills<\/a> if they lead to a higher bid for the company, for example. This may be already happening with Twitter as another bidder \u2013 a $103 billion private equity firm \u2013 <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/musk-tweets-love-me-tender-days-after-twitter-takeover-offer-2022-04-18\/\">may have surfaced<\/a>.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Board salary will be $0 if my bid succeeds, so that\u2019s ~$3M\/year saved right there<\/p>\n<p>\u2014 Elon Musk (@elonmusk) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/elonmusk\/status\/1516056299376623626?ref_src=twsrc%5Etfw\">April 18, 2022<\/a><\/p>\n<\/blockquote>\n<p>A poison pill isn\u2019t foolproof, however. A bidder facing a poison pill could try to argue that the board is not acting in the best interests of shareholders and appeal directly to them through either a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.investopedia.com\/terms\/t\/tenderoffer.asp\">tender offer<\/a> \u2013 buying shares directly from other shareholders at a premium in a public bid \u2013 or a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.investopedia.com\/terms\/p\/proxyfight.asp\">proxy contest<\/a>, which involves convincing enough fellow shareholders to join a vote to oust some or all of the existing board.<\/p>\n<p>And judging by his tweets to his <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.wsj.com\/articles\/meet-the-twitter-army-of-elon-musk-superfans-11650137427\">82 million Twitter followers<\/a>, that <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/musk-tweets-love-me-tender-days-after-twitter-takeover-offer-2022-04-18\/\">seems to be what Musk is doing<\/a>.<!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https:\/\/theconversation.com\/republishing-guidelines --><\/p>\n<p><em>Article by <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/tuugi-chuluun-1181207\">Tuugi Chuluun<\/a>, Associate Professor of Finance, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/loyola-university-maryland-1686\">Loyola University Maryland<\/a><\/em><\/p>\n<p><em>This article is republished from <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\">The Conversation<\/a> under a Creative Commons license. Read the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/do-poison-pills-work-a-finance-expert-explains-the-anti-takeover-tool-that-twitter-hopes-will-keep-elon-musk-at-bay-181447\">original article<\/a>.<\/em>\n                        <\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/technology\/\" target=\"_blank\" rel=\"noopener\">Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thenextweb.com\/news\/twitters-poison-pill-stop-elon-musk-takeover\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Will Twitter\u2019s \u2018poison pill\u2019 strategy stop Elon Musk\u2019s hostile takeover?&#8221; Takeovers are usually friendly affairs. Corporate executives engage in top-secret talks, with one company or group of investors making a bid for another business. After some negotiating, the companies engaged in the merger or acquisition announce a deal has been struck. But other takeovers are&#8230;<\/p>\n","protected":false},"author":1,"featured_media":434900,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/img-cdn.tnwcdn.com\/image\/tnw?filter_last=1&fit=1280,640&url=https:\/\/cdn0.tnwcdn.com\/wp-content\/blogs.dir\/1\/files\/2022\/04\/Elontwitter.jpg&signature=b1432befc16cd4c9543f1fb410ff7713","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-434899","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/434899","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=434899"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/434899\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/434900"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=434899"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=434899"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=434899"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}