Twitter has launched a defense against the ingestion of poison pills to repel a hostile $ 43 billion offer from Tesla billionaire CEO Elon Musk.
In the first sign that the social media company plans to fight Musk’s offer, Twitter said on Friday that its board of directors had unanimously adopted an annual plan for shareholders’ rights to “allow all shareholders to realize the full value of its investment in Twitter ”. .
The aggressive move on board, designed to prevent Musk from building more than 15 percent market share, is likely to end South African-born entrepreneur’s hopes of buying the social media company.
Musk said this week that his proposal was “the best and most final”, adding that “if it is not accepted, I will have to reconsider my position as a shareholder”. A man close to Musk said he would not move to that position.
According to Twitter’s plan, existing shareholders will be able to buy shares at a discount if someone acquires more than 15 percent without the approval of the board, diluting an unwanted participant.
Musk offered $ 54.20 per share in cash for Twitter, valuing the company at $ 43.4 billion, days after taking a 9 percent stake in the company to become one of its largest shareholders.
The Twitter board is concerned that if Musk builds a stake worth more than 15 percent, he could indirectly have significant power over the company’s management even without an executive or directorial role.
The only way he can take over Twitter now is through a mutually agreed deal, which will have to come at a significantly higher price, said a man close to the company’s board.
Poison pills were developed as a defense strategy in the 1980s to protect companies from corporate attackers and have been widely criticized as a way for company managers to strengthen themselves against attacks. Subsequent legal challenges have reduced some of their effectiveness, and most academic studies have shown that while poison pills delay an unwanted takeover offer, they usually do not prevent a possible agreement after negotiations.
Twitter said the plan could reduce the likelihood of a hostile bidder “gaining control of Twitter by accumulating an open market without paying all shareholders an appropriate control premium” and delay any bid.
“The rights plan does not prevent the Board from engaging with parties or accepting a takeover bid if the Board believes it is in the best interests of Twitter and its shareholders,” he added. The plan expires on April 23, 2023, it said.
After his shareholder was announced last week, Musk reached a preliminary agreement with the company to join its board of directors, only to reverse the course on Monday without explanation.
Musk then announced his proposal Thursday in regulatory documents, saying he would unlock the company’s potential to be a “platform for free speech around the world.” A copy of a message he sent to Twitter saying “The price is high and your shareholders will like it” was included in the documentation.
The offer is a 38% surcharge on Twitter’s share price from April 1, three days before its stake went public, although it is still 26% below its 12-month high.
It is unclear exactly how Musk will fund the deal. In an interview after the announcement, Musk said he had “sufficient assets” to do so and intended to retain as many shareholders as possible. However, he admitted: “I’m not sure I can actually get it.”
Add Comment