Twitter is launching a poison pill to thwart Elon Musk’s $ 43 billion offer

Twitter is launching a poison pill to thwart Elon Musk’s $ 43 billion offer

Twitter has launched a defense to take poison pills to turn down Tesla billionaire Elon Musk’s hostile offer from a $ 43 billion hostile offer.

As a first sign that the social media company is planning to fight Musk’s offer, Twitter said on Friday that its board of directors had unanimously adopted a one-year shareholder rights plan to “enable all shareholders to realize the full value of their Twitter investment.”

The board’s aggressive move, designed to prevent Muska from building more than 15 percent open market share, is likely to end South African-born entrepreneur’s hopes of buying a social media company.

This comes after US private equity group Thoma Bravo also expressed interest in taking Twitter privately into what would be a competitive offer to Muskova, although sources said it was at a very preliminary stage and no offer had been made.

Both Thoma Bravo and Twitter declined to comment.

Musk said this week that his offer was “the best and final”, adding that “if it is not accepted, I would have to reconsider my position as a shareholder”. A person close to Musk said he would not give up in that position.

Under Twitter’s plan, existing shareholders will be able to buy shares at a discount if anyone buys more than 15 percent without board approval, diluting an undesirable bidder.

Musk offered $ 54.20 in cash for Twitterwho valued the company at $ 43.4 billion, days after taking a 9 percent stake in the company to become one of its largest shareholders.

Twitter’s board of directors is concerned that if Musk built a stake worth more than 15 percent, it could indirectly have significant power over running the company even without an executive or directorial role.

The only way to take over Twitter now is through a mutually agreed agreement, which should have a significantly higher price, said a person close to the company’s management.

Poison pills were developed as a defense strategy in the 1980s to protect companies from corporate robbers, and have been widely criticized as a way to strengthen company managers against attacks. Subsequent legal challenges have diminished some of their effectiveness, and most academic studies have shown that while poison pills slow down unwanted takeover bids, they do not usually prevent a possible post-negotiation deal.

Twitter said the plan could reduce the likelihood of a hostile bidder “gaining control of Twitter through open market accumulation without paying all shareholders an appropriate control premium” as well as slow down any bid.

“The rights plan does not prevent the Board of Directors from contacting the parties or accepting the acquisition proposal if the Board believes it is in the best interests of Twitter and its shareholders,” it added. The plan expires on April 23, 2023.

After his ownership was announced last week, Musk reached a preliminary agreement with the company to join its board of directors, only to reverse course on Monday without explanation.

Musk then announced his offer on Thursday in a regulatory submission in which he said he would unlock the company’s potential to be a “platform for freedom of speech around the world.” The documentation also included a transcript of a message he sent on Twitter, which read: “It’s a high price and your shareholders will like it.”

The offer represents a 38 percent premium on Twitter’s share price as of April 1, three days before its stake went public, though it is still 26 percent below its 12-month high.

It is unclear exactly how Musk would finance the business. In an interview after the announcement, Musk said he has “enough assets” to do so and intends to retain as many shareholders as possible. However, he admitted: “I’m not sure I’ll really be able to get it.”

On Friday, Musk did not publicly comment on the counterattack of poison pills, but thanked his fans on Twitter for their “support” after they voted for his purchase of the company in an online poll conducted by the Bitcoin newsletter.

Additional reporting by Antoine Gare in New York

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