By Jillian WardBloomberg Posted on Apr 15, 202215 Apr 2022 Twitter Inc. adopted a measure that would protect it from hostile takeover bids, taking steps to prevent billionaire Elon Musk’s unwanted bid to make the company private and make it a bulwark of freedom of speech. The board of directors has created a shareholder rights plan, which can be exercised if a party acquires 15% of the share without prior approval, lasting only one year. The plan seeks to ensure that anyone who takes control of Twitter through open market accumulation pays all shareholders an appropriate control premium, according to a statement on Friday. Twitter approved the plan to save time, according to a person familiar with the matter. The board wants to be able to analyze any agreement and can accept it. “The Rights Draft does not prevent the Board of Directors from working with parties or accepting a takeover bid if the Board believes it is in the best interests of Twitter and its shareholders,” the company said. The CEO of Tesla Inc. offered $ 54.20 per share in cash on Twitter on Thursday, valuing the social networking company at $ 43 billion. Musk, who said it was his “best and last” offer, had already garnered more than 9% on Twitter earlier this year. Twitter’s board met on Thursday to consider Musk’s proposal to determine whether it was in the best interest of the company and all its shareholders. A poison strategy with poison pills allows existing shareholders the right to buy additional shares at a discount, substantially reducing the ownership interest of the hostile party. Poison pills are common among companies that are under fire from activist investors or in hostile situations. According to the Twitter plan, each right will give the right holder the right to buy, at the then current exercise price, additional shares of common stock that then have a current market value twice the exercise price of the right.
‘I adore it’
Musk’s title deposit, which revealed the offer on Thursday morning, includes a script that he sent to the company. He said, “It’s a high price and your shareholders will love it.” At least one leading investor, however, said supply was too low and the market reaction seemed to agree. Prince Alwaleed bin Talal of Saudi Arabia said the deal did not “approach the intrinsic value” of the popular social media platform. Speaking later at a TED conference Thursday, Musk said he was not sure he “would really be able to get it”. He added that his intention was also to retain “as many shareholders as the law allows”, instead of retaining the sole ownership of the company himself. Shares of Twitter fell 1.7% in New York on Thursday, reflecting the market view that the deal is likely to be rejected or fall. The Wall Street Journal reported earlier that the San Francisco-based company was considering protection from poison pills. Musk first unveiled his Twitter account on April 4, making him the largest single investor. At the TED conference, he showed he has a Plan B if Twitter’s board rejects his bid. He declined to give further details. But in his deposition earlier in the day, he said he would reconsider his investment if the offer failed. “If the agreement does not work, as I do not have confidence in the management nor do I believe I can lead the necessary change in the public market, I will have to reconsider my position as a shareholder,” Musk said. – With the help of Sarah Frier.
