Which other people would get those shares? Would that be considered taxable income for the recipients? If I were a regular shareholder and my shares were diluted without compensation, I'd be pissed...
The offer is extended to existing shareholders.
So if you own 10 stocks you will be allowed to purchase 10 more stocks at a vastly reduced cost.
Something like that.
This way you can screw over the corporate raider without screwing over existing stock holders.
"Another, perhaps more practical provision of the pill says that the board can just exchange each right for one share of stock, for free, meaning in essence that the board can double everyone else’s number of shares of Twitter while holding Musk’s constant, without asking anyone to put in more money." (From a recent Money Stuff.)
It also gives reasons why poison pills were allowed by the Delaware Supreme Court (and not the SEC).
This seems to be the root problem, and it can happen in other scenarios when a coalition controls 51% of the shares. The law needs to protect the minority shareholders.
This poison pill “solution” is just theft.
Some poison pills just give the shareholder extra shares -- it's basically a stock split except for the targeted shareholders.
In reality, this poison pill is more complicated - from Matt Levine: "The main mechanism of the pill is that if Musk or anyone else acquires more than 15% of Twitter's stock, then every other Twitter shareholder will have the right to pay $210 to acquire $420 worth of Twitter stock (at then-current market prices)."
He also points out that this is moot except in the highly unlikely event that it is triggered - in which case, someone screwed up really badly.