Twitter has launched a poison pill takeover defense to fend off a $43bn hostile bid from billionaire Tesla chief executive Elon Musk. In the first sign that the social media company plans to fight Musk’s bid, Twitter said on Friday that its board of directors had unanimously adopted a year-long shareholder rights plan to ‘enable all shareholders to realize the full value of their investment in Twitter’. The board’s aggressive move, designed to block Musk from building a greater than 15 per cent stake in the open market, is likely to end the South African-born entrepreneur’s hopes of buying the social media company. 

1. How do poison pills make takeovers more difficult for bidding companies?

2. Is the use of poison pills always in the best interests of the target company shareholders?