Twitter announced on Friday that its board had unanimously adopted a “poison pill” in response to a proposal by Tesla CEO Elon Musk to buy the company for more than $ 43 billion and make it private. The move will allow existing Twitter shareholders – other than Musk – to buy additional discounted shares, reducing Musk’s stake in the company and making it harder for him to garner a majority shareholder vote. . Twitter’s plan will take effect if Musk’s 9% increase to 15% or more. The poison pill introduces another twist to a melodrama that surrounds the possibility of the world’s richest man taking on a social networking platform he described on Thursday as the “de facto town square”.
Twitter said its plan would reduce the likelihood that an individual could gain control of the company without either paying a premium to shareholders or giving the board more time to evaluate a bid. Such defenses, called formal shareholder rights schemes, are used to prevent a company’s hostile takeover by making any takeover prohibitively costly for the bidder. Even if he discourages his takeover attempt, Musk could take over the company by waging a “representative battle” in which shareholders vote to retain or fire the company’s current directors. Twitter said its plan does not prevent the board from negotiating or accepting a takeover bid if it is in the company’s interest. “They are preparing for a battle here with Musk,” said Daniel Ives, an analyst at Wedbush Securities. “They also have to give themselves time to try to find another potential buyer.” Musk has offered to buy the company for more than $ 43 billion, saying it “needs to be turned into a private company” in order to build trust with its users and better serve what it calls the “social imperative” of free speech. . “Having a public platform that is maximally credible and broadly inclusive is extremely important for the future of culture,” he said during an on-stage interview at a TED event on Thursday, hours after the announcement of its offer. With around 82 million followers on Twitter, Musk is both a productive user of the platform and an ardent critic of measures he has taken to curb accounts that spread misinformation or reinforce violent rhetoric and hate speech. He said on Thursday he was opposed to permanent user bans – the most notable of which is the suspension of former President Donald Trump’s Twitter account following the Jan. 6 Capitol Uprising. Musk revealed in recent regulatory statements that he had been buying Twitter shares in near-daily batches since Jan. 31, ending up with a share of about 9%. Only Vanguard Group controls more Twitter notifications. A lawsuit filed in federal court in New York on Tuesday alleges that Musk was late in revealing his stake in the social networking company so he could buy more shares at lower prices. After Musk announced his stake, Twitter quickly offered him a seat on his board on the condition that he limit his purchases to no more than 14.9% of the company’s shares. But the company said five days later that Musk had refused. Ives said the move to Twitter’s poison pill was a predictable defensive maneuver, but could be seen as a “sign of weakness” for the Wall Street company. Musk could have tried to fight the measure in court, but “no court has overturned a poison pill in 30 years,” said Columbia University law professor John Cafe. Gathering shareholders to oust the board may be more feasible, but it also presents challenges for Musk, Coffee said. Musk’s offer already met resistance before Twitter tossed the opposite on Friday. A Saudi prince who is among the major shareholders of Twitter mocked Musk’s offer in a tweet on Thursday. Al-Walid bin Talal said he would reject Musk’s proposals because he did not believe the $ 43 billion was “close to the intrinsic value of Twitter, given its growth prospects.” The prince tweeted another from 2015, revealing that the Kingdom Company had increased its Twitter stake to 5.2% – about half of what Musk now owns. While Musk’s offer of $ 54.20 per share is almost 40% higher than Twitter’s share price before revealing its huge investment, it is still well below the $ 77.63 closing price that was reached less than 14 months ago . At the time, Twitter was valued at about $ 62 billion. Musk responded to the prince with a tweet asking how many shares he owns on Twitter and then made a covert reference to the 2018 assassination of journalist Jamal Kasogi linked to the heir to the throne of Saudi Arabia Mohammed bin Salman. “What are the Kingdom’s views on journalistic freedom of speech?” Musk asked in a tweet on Thursday. In a sign that investors are skeptical about Musk’s offer, the Twitter stock fell on the first day of trading after the announcement of the takeover bid on Thursday – the exact opposite of what looks like a market approval reaction. The stock exchanges remained closed on Friday due to the Good Friday holiday. Twitter said it plans to reveal more details about its shareholder plan in an upcoming regulatory filing. Another outspoken billionaire, Dallas Mavericks owner and technology investor Mark Cuban, took to Twitter to share his theory that Musk was trying to raise the company’s share price so he could sell his stake. with profit. Using a derogatory term, the Cuban also claimed that Musk was using the offer to torture the US Securities and Exchange Commission, the stock market regulator, which fined him $ 20 million in 2018 after tweeting about a possible Tesla takeover that did not materialize. never. At Thursday’s TED event, Musk made it clear that he was still outraged with the SEC and cursed regulators with swearing. AP Technology author Michael Liedtke in San Ramon, California contributed to this report.
