Twitter adopts ‘poison pill’ to prevent musk takeover
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The board has set up a shareholders’ rights plan, which states that if a party buys 15% of the stock without prior approval, it will only last for one year. According to a statement on Friday, if anyone takes control of the social media company through open market accumulation, it plans to pay an appropriate regulatory premium to all shareholders.
According to someone familiar with the matter, Twitter has devised a plan to buy time. The board, which met Thursday to review the bid, wants to analyze and negotiate any agreement and still accept it.
Tesla Inc. The chief executive officer on Thursday estimated the company at $ 54.20 in cash for $ 43 billion for Twitter. Musk, who described it as his “best and last” offer, had already acquired a 9% stake in Twitter earlier this year.
In addition to the Musk offer, there has been Twitter takeover interest from other parties, including technology-focused private equity firm Thomas Bravo, Bloomberg reported earlier Friday. Goldman Sachs Group Inc. And JPMorgan Chase & Co. Are advising Twitter.
The Poison Pill protection strategy allows existing shareholders the right to purchase additional shares at a discount, which effectively reduces the hostile party’s ownership interest. Poison pills are common in companies from active investors or in adverse takeover situations.
According to Twitter’s plan, each right holder will have the right to purchase additional shares of common stock that are twice the exercise value of the then – current market value right at the then – current exercise price.
Musk did not resolve the Poison Pill issue on Friday, but thanked 73% of people who showed their support for his takeover plan in an online Twitter poll and said it was too late to remove the text limit on tweets.
Musk’s securities filing revealing the bid on Thursday morning contained a text script he had sent to the company. In it he says, “It’s high price and your shareholders will like it.”
At least one prominent investor, however, said the offer was too small and the market response seemed to be accepted. Prince Alwaleed bin Talal, Prince of Saudi Arabia, said the deal “does not come close to the internal value” of the popular social media platform.
Speaking later Thursday at a TED meeting, Musk said he was not sure if he could “actually get it.” He said his intention was to retain “as many shareholders as allowed by law” rather than retain sole ownership of the company.
Shares of Twitter fell 1.7% in New York on Thursday, reflecting market sentiment that the deal could be rejected or fall. The Wall Street Journal previously reported that a San Francisco-based company was examining Poison Pill Defense.
Musk first revealed his Twitter stake on April 4, making him the largest individual investor. At the TED conference, he indicated that he had Plan B if the Twitter board turned down his offer. He declined to elaborate. However in his filing earlier in the day, he said he would reconsider his investment if the bid failed.
“If the deal does not work, if I do not trust the management or I do not believe I can lead the necessary change in the public market, I will have to reconsider my position as a shareholder,” Musk said.
Twitter, Meta Platforms Inc., Snap Inc. And unlike other tech giants, there are no entrepreneurs with majority voting control. This is particularly detrimental to activist investors and the company in the takeover interest. Although it is unclear what founder and board member Jack Dorsey thinks about Musk’s deal, he at least shared the view that Twitter could be private.
“As a public company, Twitter is always ‘for sale’.” Dorsey tweeted. “That’s the real problem.”
(Adds comment from Bloomberg Intelligence on potential partners)
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