Twitter shares rose 3.5% in after-hours trading on the New York Stock Exchange this morning following reports that Twitter’s board of directors announced a strategy to prevent a takeover of Twitter by Elon Musk as he offered to buy all of the company’s shares.
Twitter’s board of directors announced a unanimous vote in favor of a strategy known as a “poison pill,” giving Twitter shareholders the right to buy additional shares for a limited time in response to Tesla CEO Elon Musk’s offer to buy all $43 billion worth of Twitter stock.
Such arrangements are a common practice to thwart takeovers and reduce the proportion of those who seek a takeover.
Twitter said in a statement that the plan would reduce the likelihood of an individual or group of individuals gaining control of Twitter through stock market takeovers without paying all shareholders the fair value of the acquisition or not giving the board enough time to make decisions and do the best it can for the good of shareholders.