Can my employer threaten me with termination if I don't seek a transfer to another department?

I am a long term employee (5+ years) and was recently asked to "find another job" after being threatened with "other action" in a Fortune 500's IT area. My performance has always been good as stated in my performance reviews. The person that made these comments, my boss's boss, stated they would allow me to attempt transfer within the company inferring that if I did not speak of this to HR or anyone else, the internal transfer option would be kept open. While I initially thought this was part of the company's reduction-in-force policy, my boss's boss told me during this conversation that "people within our organization are gathering evidence against you to move you out" which has made me think there is more here than meets the eye. The person that made these comments had also just been given a PIP (performance improvement plan) from his boss which is not good and would halt all attempts at transfer per company policy. Three months prior to that point and since that time, many things have changed within the department. This person is has been on the job a year and, through quiet investigation, is using this technique to remove two others within my department. While I am not aware of their job performance, his actions seem wrong to me. What do you think?

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