Twitter adopts 'poison pill' to thwart Elon Musk's hostile takeover ⁠— here are 3 options the billionaire can take now

On Friday, however, Twitter's board of directors adopted a shareholder rights plan known as a “poison pill.” It’s a defense strategy that gives existing shareholders the right to purchase additional shares at a discount, aiming to dilute the ownership interest of the hostile party.

How will Musk respond? According to Dan Ives, analyst at Wall Street firm Wedbush Securities, Musk has three options going forward.

Here’s a quick look at each one of them.

Lay out a plan

Ives wrote that Musk’s first option is to “formally lay out his financing” for the deal.

Twitter isn't exactly pocket change, even for Musk. Ive says that to finance the deal, Musk will likely need to take on debt by using his Tesla and SpaceX holdings as collateral.

It would also be helpful for Musk to present his vision for the social media platform to Twitter’s board and shareholders.

“Given Musk’s antics over the years as well as comments at last week’s TED conference, the Street remains skeptical on this bid and more details need to be highlighted to get more investors on board and increase pressure on the Board,” Ives says.

Today, Twitter trades at around $47 — about the same level as it did when it went public in 2013. A new vision from Musk could entice shareholders.

Get a partner

Another option for Musk is to team up with a strategic partner and increase the bid to around $60 per share, which according to Ives, "seems to be a more appropriate level in the eyes of many Twitter shareholders that could get the deal over the goal line."

That said, Ives also points out that strategic buyers like private equity firms will probably think twice about acquiring Twitter because of the company’s poor free cash flow generation.