Elon Musk In recent years, he has played in an occasional soap opera on Twitter. We have become accustomed to his verbal excesses, his boasting and fleeing, which provoke SEC investigations. But what we didn’t expect a few weeks ago was that the social network itself was the protagonist of one of those stellar moments of the founders of Tesla and SpaceX.

As we told you a few weeks ago, Elon Musk expands its stake in Twitter to 9.3% securities of the company. In addition, along with the purchase, it was announced that the billionaire would become a member of the board of the social network. However, an important detail remained in the air, namely that Musk’s entry into the board of directors was conditioned by the fact that his participation would never exceed 15%.

Finally, as we have already told you, Elon Musk refused to join the board and announced his intention to take control of Twitter a few days later. with the purchase of shares worth $ 43,000 million. Why become a board member when you can buy the company directly and do what you want with it? Musk seems to be really interested in taking over the social network and applying his action plan to it.

But it wasn’t that easy. Already with masks out, with Musk’s tweet (yes, he did it on Twitter himself) that one of the actions he planned was reduce the salaries of board members to zero dollarsit turned out that this takeover bid (takeover bid) has a hostile character, and therefore the current directors decided to deal with it using an interesting mechanism, commonly called poison pill (poison pill or tablet).

purchase, as raised by Musk, tThey have the option to issue more shares and make them available to current shareholders at a price lower than the market price. And what will be achieved? Very simple, dilute the participation of a new shareholder.

let’s put you downA very, very basic example with NOT real data: Imagine that Twitter has a total of two million shares, but only outstanding (those that a new investor wants to buy), and that each costs ten euros. Arithmetic is simple, if you invest ten million dollars to gain control of that million shares, you will own 50% of the company. But here comes the poison pill.

Current Twitter directors decide on the issue, let’s say another two million sharesand that current directors and shareholders can buy each new title for five dollars. Quite an interesting offer, if the profitability of the company’s shares is up to the state, right? So those two million shares will be sold to those specific people, for a total of another ten million dollars. Do you see what happened?

Now it really turns out that the buyer who wanted to take control of the company, in this case Twitter, and that by buying shares in the market took control of 50% of the company (one million shares of both million then existing), Suddenly you no longer have 50%, but 25%.. In addition, the shares you bought were devalued due to the presence of new titles.

This mechanism, a toxic pill, has existed in the United States since the 1980s, and many companies have used it to protect against hostile takeover bids. From Netflix to Papa John’s, has always been effective, to the extent that its simple invocation in all cases blocked acquisition attempts. Of course, so far the famous pill has not had to face an ego like Elon Musk and his intentions to control Twitter … will it be the first time?