Twitter’s Board of Directors Adopts a Poison Pill

Twitter adopted a poison pill (i.e., a shareholder rights plan), that included a preferred stock purchase right, a flip-in right, and flip-over right, on April 15, 2022, a day after an investor offered to buy its remaining shares for $54.20 per share, for a total of more than $43 billion. Under the poison pill, if a shareholder acquires 15% of Twitter’s outstanding common stock without the board’s approval, the other shareholders will be allowed to purchase additional shares at a considerable discount. This kind of tactic is a common way to thwart off a hostile takeover attempt, but how exactly does it work?

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