Twitter thwarts Elon Musk’s takeover with a poison pill

Poison pills have been around for decades. Attorney Martin Lipton, founding partner of Wachtell, Lipton, Rosen & Katz, invented the maneuver, also known as a shareholder rights plan, in 1982. It was a way to strengthen a company’s defenses against corporate takeovers. unwanted control by so-called corporate raiders. like Carl Icahn and T. Boone Pickens.

They have since become part of America’s business tool kit. Netflix adopted a poison pill in 2012 to prevent Mr. Icahn from buying back his shares. Papa John’s used one against the pizza chain’s founder and president, John Schnatter, in 2018.

Investors rarely try to get around a poison pill by buying shares above the threshold set by the company, according to securities experts. One said it would be “financially ruinous” even for Mr Musk.

But Mr. Musk, who is worth more than $250 billion and is the chief executive of Tesla and SpaceX, rarely respects precedent. It announced its intention to acquire Twitter on Thursday, going public with an unsolicited offer worth more than $40 billion. In an interview at a TED talk later that day, he challenged Twitter’s moderation policies, which govern content shared on the platform.

Twitter is the “de facto town square,” Musk said, adding that “it’s really important that people have the reality and the perception that they can speak freely within the bounds of the law.” Twitter currently prohibits many types of content, including spam, threats of violence, sharing of private information, and coordinated disinformation campaigns.

Mr Musk argued that making Twitter private would allow more free speech to flow on the platform. “My strong intuitive feeling is that it’s extremely important for the future of civilization to have a public platform of maximum trust that is broadly inclusive,” he said during the TED interview. He also insisted that the algorithm used by Twitter to rank its content, deciding what hundreds of millions of users see on the service every day, should be public for users to audit.

Mr. Musk’s concerns are shared by many Twitter executives, who have also called for more transparency about its algorithms. The company has released internal research on bias in its algorithms and funded an effort to create an open and transparent standard for social media services.

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