Eric Bischoff has a question on Elon Musk’s Twitter takeover bid and Musk likes it

The situation surrounding Twitter's potential takeover by Tesla CEO Elon Musk seems to get more and more complicated by the day as his proposal to buy the company and take it private has been rejected unanimously by the board of directors, who have adopted a 'poison pill' defence.

Considering Twitter's complicated situation at the moment, former World Wrestling Entertainment (WWE) RAW manager Eric Bishoff has taken to his official social media handle and raised a pertinent question. Bishoff is keen on understanding if the Twitter board as trustees reject the tech mogul's offer, will the shareholders of the company have 'legal recourse.'

Musk, who is currently the second-highest shareholder of Twitter with a 9.1% stake, is keen on taking the company private by purchasing the shares at $54.20. However, the Twitter board has rejected such an offer as they believe that Musk needs to pay the shareholders a premium or give the board more time. Their poison pill counter-strategy is aimed to defend against 'hostile takeovers.'

How does Twitter's poison-pill strategy prevent Musk from taking over?

Via a securities filing on Thursday, Twitter revealed that Tesla CEO Elon Musk had offered to buy the company outright for more than $43 billion. Musk believes that the social media giant 'needs to be transformed as a private company' if they are to build trust with its users.

If Musk were to purchase 15% or more of Twitter's stake, the poison-pill strategy would come into play. Under this structure, if any individual or group were to acquire ownership of at least 15% of Twitter's outstanding common stock without the board's approval, other shareholders of the company would be permitted to purchase additional shares at a discount.

The company's press release explained how such a plan would ensure that all shareholders are compensated fairly by stating, "The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders."

After Musk revealed that he had about 9% stake in Twitter, only second to Vanguard Group's 10.3%, the social media giant offered him a seat on its board of directors on the condition that the tech mogul would limit his purchase to no more than 14.9% of the company's outstanding stock. However, the company revealed five days later that Musk had refused. Considering the ongoing saga, it remains to be seen what is the future of Twitter and if Musk would succeed in taking the company private.