Twitter made a move on Friday to shield itself from the $43 billion takeover bid by billionaire Elon Musk.
The social media company's board adopted a limited-duration shareholder rights plan, which would enable its shareholders to buy additional stock, it said in a statement.
Under the plan, also known as a "poison pill" strategy to resist a bid from a potential acquirer, "the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15 per cent or more of Twitter's outstanding common stock in a transaction not approved by the board", Twitter said.
On Thursday, Mr Musk, founder and chief executive of electric vehicle maker Tesla and rocket company SpaceX, offered to buy 100 per cent of Twitter for roughly $43 billion, proposing an offer price of $54.20 a share, in a filing to the Securities and Exchange Commission.
“My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,” he said at the time.
Twitter's shareholder rights plan, which will expire in a year, "does not prevent the board from engaging with parties or accepting an acquisition proposal if the board believes that it is in the best interests of Twitter and its shareholders", the San Francisco-based company said.
The plan is "intended to enable all shareholders to realise the full value of their investment in Twitter".
It 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", it added.
Saudi Arabian billionaire Prince Alwaleed bin Talal, who owns a stake in Twitter through his Kingdom Holding Company, rejected Mr Musk’s Thursday offer, saying the proposed offer did not “come close to the intrinsic value of Twitter given its growth prospects”.
“Being one of the largest and long-term shareholders of Twitter, Kingdom Holding Company and I reject this offer,” Prince Alwaleed said on Twitter.
Mr Musk's offer price of $54.20 per share represents a 38 per cent premium on the closing price of Twitter’s stock on April 1, the last trading day before his investment of 9.2 per cent in the company was publicly announced.
Twitter’s stock fell 1.7 per cent on Thursday to $45.08, well below his $54.20 proposal.
Meanwhile, as Twitter’s single largest shareholder after his acquisition of about 73.5 million shares valued at about $3bn, Mr Musk was offered a seat on its board, but he declined the offer this week.
With more than 80 million followers on Twitter, Mr Musk has long been one of the site’s most prominent users and also one of its most outspoken critics.
Mr Musk is the world’s richest person, with a current net worth of $259bn, according to the Bloomberg Billionaires Index. He topped the Forbes 2022 World Billionaires List for the first time last week with a net worth of $219bn.