> The poison pill dilutes everyone’s shares.
This is factually incorrect.
The poison pill is specifically designed to dilute the hostile actor's shares, while leaving everyone else mostly untouched (depending on the pill's mechanisms).
> The hostile actor could / would dump their shares after the hostile take over attempt. That would crash the price.
They could, but would they? This would hurt them, too, so it rarely happens. That being said, Musk certainly has enough money and pettiness to lose billions to prove a point, but very few hostile takeover investors have that much money to burn.
> Alternatively, the board would keep creating shares as the hostile actor attempted to buy more. Keeping the price the same or higher.
How would they prevent the market from devaluing the stock as more is printed? This is like govts trying to print more money, it leads to inflation.
> Else they’d open themselves to lawsuits anyway.
If the market thought Twitter had better plans for future profitability, they could be sued for the opposite, going with Musk. They can basically always be sued if enough shareholders think they're not doing a good job.
> He’d dump 10% and instantly the price would be down 40-60%, plus people would lose confidence and drop further.
Putting aside the likelihood hostile takeover investors would waste billions in spite, it seems unlikely that a failed takeover would change the stock price for longer than a news cycle. All the fundamentals are unchanged, so it's more likely the price would return to what it was before.