After Elon Musk made an above-market-value bid to buy Twitter, the company’s board of directors indicated it would rather swallow a poison pill than let Musk take over. On Friday, Twitter’s board announced it unanimously adopted a shareholders-rights plan, also known as a poison pill, after Musk’s unsolicited offer.

What’s a poison pill?

A poison pill is a defensive strategy companies use to prevent hostile takeovers.

When triggered, the company floods the market with new stock that other shareholders can buy at a discounted price. This action dilutes the value of shares that already exist, making it prohibitively more expensive for the “hostile party” to buy control.

In a “flip-in poison pill,” which Twitter adopted, every existing shareholder except the potential acquirer can buy the discounted shares.

The poison pill strategy is named after the deadly pills spies would carry around to take if captured to avoid interrogation. While a corporation may prevent a takeover by swallowing the pill, it can also be a harmful measure for investors in the meantime.

The details of Twitter’s pill

In Twitter’s case, the board voted to take the pill if Musk or anyone else buys more than 15% of the company without approval from the board. Musk owns a little more than 9% currently.

“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,” Twitter said in a statement.

Twitter’s poison-pill plan will last for one year, expiring April 14, 2023. In the meantime, the board can still explore Musk’s buyout offer of $54.20 per share or entertain other offers they believe to be “in the best interests of Twitter and its shareholders.”