Twitter rejects Musk's takeover bid

Twitter has used a poison pill to fend off a hostile $43 billion takeover bid by billionaire Tesla CEO Elon Musk.

In the first indication that the social media company plans to fight Musk's bid, Twitter said on Friday that its board of directors unanimously adopted a year-long shareholder rights plan to "allow all shareholders to realize the full value of their investment in to realize Twitter".

The board's aggressive move aimed at blocking Musk from acquiring a stake of more than 15 percent in the open market will likely end the South African-born entrepreneur's hopes of buying the social media company.

This comes at a time when US private equity group Thoma Bravo has also expressed interest in privatizing Twitter, which would be a competing offer to Musk's, although sources said it was a very preliminary one Stadium and no offer has been made.

Both Thoma Bravo and Twitter declined to comment.

Musk said this week that his offer was 'the best and final', adding that if it is not accepted I will have to reconsider my position as a shareholder. A person close to Musk said he will not back down from that position.

Twitter's plan would allow existing shareholders to buy shares at a discount if someone acquires more than 15 percent without board approval, in order to dilute an unwanted bidder.

Musk offered Twitter $54.20 per share in cash, valuing the company at $43.4 billion, days after taking a 9 percent stake in the company, becoming one of its largest shareholders.

The Twitter executive worries that if Musk builds a stake above 15 percent, he could indirectly exercise significant influence over the company's leadership, even if he doesn't sit on the executive board or board of directors.

The only way for Musk to take over Twitter is through an amicable deal, which would have to come at a significantly higher price, said a person close to the company's board of directors.

Poison pills were developed in the 1980s as a defensive strategy to protect companies from takeover thieves and have been widely criticized as a way for a company's managers to wall themselves in against attack. Subsequent legal challenges have partially reduced their effectiveness, and most academic studies have shown that while poison pills slow an unwanted takeover bid, they typically do not prevent a post-negotiation settlement from occurring.

Twitter said the plan could reduce the likelihood of a hostile bidder "gaining control of Twitter through accumulation in the open market without paying all shareholders a reasonable control premium" and could slow any bid.

"The Rights Plan does not prevent the board from engaging with parties or accepting an acquisition proposal when the board believes doing so is in the best interests of Twitter and its shareholders," it said. The plan expires on April 23, 2023, it said.

After announcing his stake last week, Musk had reached a tentative agreement with the company to join the board, only to change course Monday without explanation.

Musk announced his bid in a regulatory filing Thursday, saying he will "unleash the company's potential as a platform for free speech around the world." The filings also included a transcript of a message he sent to Twitter , which read, "It's a big price and your shareholders will love it."

The offer represents a 38 percent premium to Twitter's share price since April 1, three days before the announcement of its stake, though it's still 26 percent below its 12-month high.

It's unclear exactly how Musk would fund the deal. In an interview following the announcement, Musk said he has "adequate funds" and intends to retain as many shareholders as possible. However, he admitted, "I'm not sure I'll be able to actually purchase it."

Musk didn't publicly address the poison pill attack on Friday, instead thanking his fans on Twitter for their "support" after they voted for him to buy the company in an online poll conducted by a Bitcoin newsletter.