Currently, Musk holds 15% of the stocks in Twitter. The board of the company decided to activate a poison pill. According to the poison pill provisions, the company will have a 2:1 rights issue (that is for every old share you can buy two new shares) except for Elon Musk, with a subscription price of $20. Assume Musk decided to buy another 1% of the shares at the price of $35 and triggered the poison pill. 

Calculate:

i. The new price of Twitter after the activation of the poison pill

ii. The effect of the poison pill on the voting rights of Elon Musk

iii. The effect of the poison pill on the wealth of Elon Musk

Answer rating: 100% (QA)

i The new price of Twitter after the activation of the poison pill Assuming the current price of Twitters stock is x the total number of shares in the ... View the full answer