PROVIDENCE, R.I. (AP) — Twitter said Friday that its board of directors has unanimously adopted a “poison pill” defense in response to Tesla CEO Elon Musk’s proposal to buy the company and take it private.
The move would allow existing Twitter shareholders to buy additional shares at a discount, thereby diluting Musk’s stake in the company and making it harder for him to corral a majority of shareholder votes in favor of the acquisition.
Twitter’s plan would take effect if Musk’s roughly 9% stake grows to 15% or more.
Twitter said the poison pill would enable its investors to “realize the full value of their investment” by reducing the likelihood that any one person can gain control of the company without either paying shareholders a premium or giving the board more time to evaluate their offer. Such defenses, formally called shareholder rights plans, are used to prevent the takeover of a corporation by making any acquisition prohibitively expensive for the bidder.
Even if it discourages his takeover attempt, Musk could still take over the company by waging a “proxy fight” in which shareholders vote to retain or dismiss the company’s current directors. Twitter said the plan doesn’t prevent the board from engaging with parties or accepting an acquisition proposal if it’s in the company’s best interests.
“They’re gearing up for a battle here with Musk,” said Daniel Ives, an analyst for Wedbush Securities. “They also have to give themselves time to try to find another potential buyer.”
Twitter revealed in a securities filing Thursday that Musk offered to buy the company outright for more than $43 billion, saying the social media platform “needs to be transformed as a private company” in order to build trust with its users.
“I believe free speech is a societal imperative for a functioning democracy,” Musk said in the filing. “I now realize the company will neither thrive nor serve this societal imperative in its current form.”
Later on Thursday, during an onstage interview at a TED event, he went even broader: “Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization.”
Musk revealed in regulatory filings over recent weeks that he’d been buying Twitter shares in almost daily batches starting Jan. 31, ending up with a stake of about 9%. Only Vanguard Group controls more Twitter shares. A lawsuit filed Tuesday in New York federal court alleged that Musk illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.
After Musk announced his stake, Twitter quickly offered him a seat on its board on the condition that he would limit his purchases to no more than 14.9% of the company’s outstanding stock. But the company said five days later that Musk had declined.
Ives said Twitter’s poison pill path is a predictable defensive maneuver but could be seen as a “sign of weakness” on Wall Street.
16 May 2024
23 May 2024
Comments (3)
Joe Bottoms!! says:
April 16, 2022 at 4:17 am
See what happens when you let incompetent communists own and run companies in the US. They sacrifice shareholder value to protect their corrupt world. The problem for them now and for Facebook, or whatever the f…they are called now and their leftie media and democrat conspirators is they are found out.Americans with half a brain, thats 50% of us and no one in the media, has found them out.They have revealed themselves for what they are..Debased/corrupt socialist organizations that all need to go away..The snowflakes at Twitt are too stupid to know what they just did..It’s called suicide and commies do it everyday!!
Joe Bottoms!! says:
April 16, 2022 at 4:24 am
….btw is there anything these idiots dont screw up..Look at the dumb SOB they put in the White House!!
tvn-member-3011604 says:
April 16, 2022 at 12:16 pm
By now, it’s pretty obvious that Twitter has nothing to do with free speech. It’s a leftist platform. At some point, the government is going to have to step in and regulate it and companies like it. “But wait! Twitter is a private company!” Yeah well, so was Bell Telephone. But the government saw the growing power of telecommunications and Bell and knew it was time to regulate it and eventually break up Bell Telephone. Twitter and similar companies are no different. As the majority shareholder, I would encourage Musk to sue the Twitter board for purposely devaluing the company while pressuring key legislators to craft regulations controlling social media. I don’t see any other way.