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Twitter Adopts 'Poison Pill' Strategy

Published on April 16, 2022
Current Context: Twitter Board has come up with a defensive strategy to allow any shareholder who intends to acquire more than 15 % of shares, to buy additional shares at discount. Elon Musk has offered 43 Billion USD to buy all the shares from the open market and acquire the company.
Twitter Adopts 'Poison Pill' Strategy
  • The poison Pill Strategy is a defensive measure to stop a major shareholder from adopting aggressive acquisitions of the rest of the shares.
  • Instead of allowing the shareholder to buy the existing shares from the other shareholders, the Board of the company issues additional shares to that major shareholder. This helps in increments of the total capital, thus, if that shareholder buys the additional shares, his shareholding undergoes dilution.
  • This strategy is also used to look at the actual pricing of the company. As of now, Elon Musk owns 9 % of the total shares of Twitter. His bid to buy Twitter has sparked a new debate in the capital market.


Q.1 What do you mean by Poison Pill Strategy?
a. A mechanism to allow buying of additional shares to dilute the overall shareholding
b. A money market strategy to contain the fluctuation in the price of G-Secs
c. A mechanism to buy existing shares at discount
d. None of the above
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