Twitter's board of directors has unanimously adopted a limited duration shareholder rights plan following Tesla CEO Elon Musk's $54.20 per share offer to take the social media giant private.
Under the plan, which is also referred to as a "poison pill", shareholders' rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of Twitter's outstanding common stock in a transaction not approved by the board.
In the event that the rights become exercisable, existing Twitter shareholders — except for the person, entity or group triggering the plan — would be entitled to purchase additional shares of common stock at a discount.
"The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter. The Rights 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.
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