Barely a week after Elon Musk offered Twitter $43 billion to buy the company and take it private, the board has responded with its own move: a poison pill. The tactic, which was created in the 1980s to thwart hostile takeovers, would see Twitter dilute Musk's shares if he reached a 15% ownership threshold. He currently owns slightly more than 9% of the company. 

• The plan would enable shareholders to purchase new shares at a discount if anyone (re: Musk) acquired 15% or more of the company without the board's approval. This structure was passed unanimously by the board and expires in April 2023.

• According to CNBC, Musk said he has a "plan B" to acquire the company if his initial offer is rejected. However, he did not clarify what the plan would entail. 

Purchasing Power

Musk may be the richest person on Earth (well, unless Putin or Xi's net worths suddenly come to light), but he doesn't exactly have $43 billion in cash. By and large, Musk's wealth is tied up in Tesla stock, and Bloomberg estimates that he “currently has about $3 billion in cash or other somewhat liquid assets after spending $2.6 billion buying a 9.1% stake in Twitter.” The $43 billion price tag represents about a sixth of his net worth, so it remains unclear exactly what the centibillionaire's Plan A to purchase the company is, let alone his Plan B.

The Verdict

Musk’s offer has already opened the company up to additional offers, which the board may be more accepting of. Regardless, Musk is still leaving many scratching their heads over his reason for buying the company, his plan to secure the capital, and what his "plan B" even is.