Do poison pills work? A finance expert explains the anti-takeover tool that Twitter hopes will keep Elon Musk at bay
Poison pills usually work, but Elon Musk appears undeterred. AP Photo/Ringo H.W. Chiu Tuugi Chuluun , Loyola University Maryland 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 more hostile in nature. Not every company wants to be taken over. This is the case with Elon Musk’s US$43 billion bid to buy Twitter. 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 “poison pill.” It is designed to block an investor from accumulating a majority stake in a company. Twitter adopted a poison pill plan on April 15, 2022, shortly after Musk unveiled his takeover offer ...