Recently, you might have heard about Twitter using a “poison pill” option to fend off a hostile takeover. While it sounds like something a Wicked Queen would use in a fairy tale, the poison pill is not uncommon. A hostile takeover happens when a company doesn’t want to change hands and takes measures to prevent it. The defensive move is the poison pill, a business strategy that makes the takeover more difficult or expensive. Such a move is usually part of a shareholder rights plan. In the case of Twitter, the company plans to offer shareholders a discounted price on stock should a single entity purchase more than a 15% stake. This was in response to Elon Musk making an offer to take the company private. Questions about the poison pill practice? Part of our goal as your independent advisor is to provide financial education and clarity through the headlines. Don't hesitate to reach out. |
