Twitter just adopted a poison pill in response to Elon’s $43B takeover bid.

Netflix did a similar maneuver in 2012 to thwart Carl Icahn.

Here’s how it played out:

First, what is a “poison pill”? It’s another name for “shareholder rights plan” and a corporate tactic invented during the wild leverage buyout (LBO) days of the 1980s.

The move allows corporate boards to defend against unwanted takeover attempts (and “protect” shareholders).

Anti-takeover defense includes:

— Issuing of preferred stocks w/ special rights to the board — Control of shareholder meeting schedule — Option for existing shareholders to buy more stock at a discount (thereby diluting stake of the party trying a hostile/unsolicited takeover)

In 2012, Netflix’s stock was struggling.

Famed corporate raider Carl Icahn built up a 9.98% position in Netflix and said the company should be acquired by MSFT or AMZN.

NFLX adopted a poison pill that would kick in if an individual acquired 10% (or Institutional acquired 20%).

Icahn never did acquire more shares. Instead he started selling (just as Netflix’s stock price recovered).

In the end, Netflix cancelled the poison pill in 2013 (two years before it was supposed to expire).