Twitter Inc. has adopted A measure that would protect it from hostile takeover offers, it takes steps to thwart billionaire Elon Musk’s unwanted offer to make the company private and make it a bastion of free speech.
The Board of Directors has drawn up a shareholder’s equity plan, executable if one of the parties acquires 15% of the shares without prior approval, and it lasts for one year only. The plan seeks to ensure that anyone who controls Twitter through an open market buildup pays all shareholders an appropriate control premium, according to a statement Friday.
Twitter has embarked on the plan to buy time, according to a person familiar with the matter. The board wants to be able to analyze and negotiate any deal, and still be able to accept it.
The rights plan does not preclude the board from engaging with parties or accepting a takeover proposal if the board believes it is in the best interests of Twitter and its shareholders, the company said.
The CEO of Tesla Inc. On Thursday, Twitter received $54.20 per cash share, valuing the social media company at $43 billion. Musk, who said it was his “best and last” show, has already taken a more than 9% stake in Twitter since earlier this year. Twitter’s board met Thursday to review Musk’s proposal to determine whether it is in the best interest of the company and all of its shareholders.
The strategy of defending the poison pill gives existing shareholders the right to purchase additional shares at a discount, effectively reducing the ownership of the hostile party. Poison pills are common among companies that are under fire from active investors or in hostile takeovers.
Under Twitter’s plan, each Right will entitle its holder to purchase, at the then-current exercise price, additional shares of common stock whose current market value is twice the right’s exercise price.
Musk Securities’ filing that disclosed the bid Thursday morning included a transcript he sent to the company. “It’s a high price and your shareholders will love it,” he said.
But at least one prominent investor said supply was too low and the market’s reaction seemed to be in agreement. Saudi Prince Al-Waleed bin Talal said the deal “does not come close to the intrinsic value” of the popular social media platform.
Speaking later Thursday at a TED conference, Musk said he wasn’t sure he would “really be able to get it.” He added that his intention was also to keep “as many shareholders as the law allows,” rather than keeping sole ownership of the company himself.
Twitter shares fell 1.7% in New York on Thursday, reflecting the market’s view that the deal is likely to be rejected or failed. The Wall Street Journal previously reported that the San Francisco-based company is considering defending the toxic pill.
Musk first revealed his stake on Twitter on April 4, making him the largest single investor. At the TED conference, he indicated that he had a plan B if the Twitter board rejected his offer. He declined to go into details. But he said in his filing earlier today that he would reconsider his investment if the bid failed.
“If the deal doesn’t work out, because I don’t trust management and don’t think I can lead the necessary change in the public market, I will need to reconsider my position as a shareholder,” Musk said.
– With the help of Jillian Ward.
(This story has not been edited by the NDTV crew and is automatically generated from a shared feed.)
“Certified music scholar. Freelance analyst. Social mediaholic. Hipster-friendly web nerd. Zombie buff.”