Twitter has just adopted a poison pill defense against a potential hostile takeover bid from Elon Musk, who recently made a $43 billion offer to buy 100% of the company's stock.
The plan, which was unanimously approved by Twitter's board of directors, is designed to make it far more difficult to purchase more than 15% of the company's stock according to the press release Twitter published announcing the move.
So-called poison pills provisions (also known as shareholder-rights plans) are legally designed to make it prohibitively expensive for any one shareholder to accumulate more than a set percentage of a company's stock.
“The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter,” the company said. “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.”
The plan is triggered when any shareholder tries to acquire 15% or more of the company's outstanding stock shares without the approval of the company's board of directors. If such an attempt is made, then the current shareholders would have the option of buying additional shares at a discounted price and the entity triggering the plan would have to buy any additional shares beyond the 15% threshold at a premium.
Musk offered to pay $54.20 a share in his unsolicited takeover offer with the stated intention of taking the company private if his offer was accepted. Musk has been an outspoken critic of the way Twitter has been run, so a takeover by Musk would almost certainly make substantial changes to the popular social media platform.
Opinion: Elon Musk buying Twitter would be an absolute disaster
Currently, the debate over “free speech” on Twitter is more or less locked into a stalemate, with every side claiming that they are being censored by the company. To be clear, Twitter is a private enterprise, not a government entity. The company is free to set its own policies that users must agree to in order to use the platform, so long as it complies with applicable laws.
There is no law saying you can't be banned from Twitter for what you post on the platform, and it is left to the company to decide what posts violate their terms of use. Whether that is how it should be is a different matter, but for now, that is how it is, and this is what is apparently upsetting Musk, who has criticized the company for censoring users.
Free speech is essential to a functioning democracy.Do you believe Twitter rigorously adheres to this principle?March 25, 2022
Considering the often toxic interactions users can experience on Twitter (and the internet more broadly), lifting all restrictions on what users can post wouldn't lead to a flourishing of positive, constructive debate. We've run this experiment already, we know the outcome.
The internet isn't the liberating, free-speech frontier that early web pioneers like Musk believe that it should or could be if it were just unshackled from some Big Brother authority, whether government or corporate. It has proven itself to be a brutal, digital colosseum where the most socially vulnerable users are fed to the lions for the cynical thrill of a small subset of its users who, like parodies of The Joker, claim to want to watch the world burn but who are really only interested in burning their perceived enemies at the stake from the safety of internet anonymity.
“Debate” is a vague term, and what a social network observes that causes them to “censor” something is masses of people engaging in “debate” – that is to say: abusive volumes of activity violating spam and harrassment rules, sometimes prompting off-site real-world harm.April 15, 2022
Like all social media companies, Twitter has a complicated track record in this regard, but it is also one of the most responsive to these challenges. Pretending that these challenges can be overcome by individual users through gumption or growing thicker skin is easy for someone like Musk, who generally basks in the sycophantic adoration of his fans. He's among the richest handful of people in the world, and nothing insolates you from the devastating emotional effects of online harassment like money.
Musk wants to be liberated from the restrictions Twitter places on its users, because of course he does. No one that rich ever wants someone to tell them what they can and cannot do, but those rules aren't in place to protect people like Musk. They're there to protect the rest of us, and especially women; ethnic, sexual, and religious minorities; and other vulnerable people who have already been irreparably harmed by the free-for-all of online social media mobs with the current restrictions in place.
Holding a town hall to discuss the important matters of the day can't happen if there is someone in the crowd shouting obscenities, racial slurs, and making threats against everyone around them. If Musk took over Twitter with the intention of preventing “censorship”, it would be the end of Twitter.
It's already walking a tightrope between being a contentious public forum and a hellsite. The only people Musk would liberate would be the trolls, and the mass exodus from the platform would be almost instantaneous, triggering a fatal cycle of us normies bailing for other platforms, which simply makes the voices of the trolls that much louder, forcing even more people off the platform. Then there's the Twitter employees themselves, who would likely leave in droves, driving the quality of the site into a tailspin, further eroding its user base.
If Musk's goal is to destroy Twitter, I can't think of a better way for him to do it.
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