At the first sign that the social media company was planning to fight Musk’s bid, Twitter said on Friday that its board had unanimously approved a one-year shareholder rights plan to “allow all shareholders to realize the full value of their Twitter investment. ” . The board’s aggressive move, designed to prevent Musk from gaining more than 15 percent of the open market, is likely to put an end to the South African-born businessman’s hopes of buying the social networking company. Musk said this week that his offer was “better and final”, adding that “if it is not accepted, I will have to reconsider my position as a shareholder”. A person close to Musk said he was not going to step down in that position. Under the Twitter plan, existing shareholders will be able to buy discounted shares if one acquires more than 15 percent without board approval, thus reducing an unwanted bidder. Musk offered $ 54.20 a share in cash for Twitter, valuing the company at $ 43.4 billion, days after taking 9% of the company to become one of its largest shareholders. Twitter’s board is concerned that if Musk generated a stake of more than 15%, he could indirectly exercise significant power over the company’s management, even without an executive or director. The only way for Twitter to take over now is through a mutually agreed deal, which should have a significantly higher price, said a person close to the company’s board. Poison pills were developed as a defense strategy in the 1980s to protect companies from corporate intruders and were widely criticized as a way for company executives to establish themselves against attack. The ensuing legal challenges have diminished some of their effectiveness, and most academic studies have shown that while poison pills slow down an unwanted takeover bid, they usually do not preclude a possible post-trade agreement. Twitter said the plan could reduce the likelihood of a hostile bidder “gaining control of Twitter by accumulating in the open market without paying all shareholders the appropriate control premium,” as well as slowing down any bidding. “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,” he added. The plan expires on April 23, 2023, he said. Following the announcement of his participation last week, Musk reached a preliminary agreement with the company to join its board, but was reversed on Monday without explanation. Musk then announced his offer on Thursday in a regulatory statement in which he said he would unlock the company’s ability to be “the platform for free speech around the world.” The deposit included a transcript of a message he sent to Twitter, saying: “It’s a high price and your shareholders will love it.” The offering represents a premium of 38 percent on Twitter’s share price from April 1, three days before its share was made public, although it is still 26 percent below its 12-month high. It is unclear exactly how Musk would finance 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 if I can get it.”
