Twitter Approves Limited Duration Shareholder Rights Plan
Twitter recently announced that its Board of Directors unanimously approved a limited-term shareholder rights plan (namely the "Rights Plan") after an unsolicited, non-binding bid to acquire Twitter.
The Rights Plan aims to ensure that all Twitter shareholders get the most out of their investment, and will make it less likely for any business, person, or group to assume control of Twitter through open market accumulation without providing all shareholders a suitable control premium or giving the Board enough time to make rational decisions and execute measures in behalf of its shareholders.
The Rights Plan does not restrict the Board from communicating with parties or approving an acquisition proposal if it is in Twitter's and its shareholders' best interests.
The Rights Plan is similar to certain plans implemented by publicly-traded companies that are in the same situation. The rights would become applicable under the Rights Plan if an entity, person, or group acquires beneficial ownership of 15% or more of Twitter's outstanding common shares in a non-Board-approved transaction.
If the rights become exercisable as a result of the triggering ownership threshold being exceeded, each right holder (other than the person, entity, or group that triggered the Rights Plan, whose rights will become void and invalid) will be entitled to acquire additional shares of common stock with a then-current market value of twice the exercise price of the right at the then-current exercise price.