Business

Twitter accepts ‘poison pill’ defense against Musk takeover bid

Twitter on Friday fended off Elon Musk’s hostile $43 billion takeover bid and announced a plan that would allow shareholders to buy additional shares.

Musk’s proposal faces uncertainties on several fronts, including a possible rejection and the challenge of raising the funds, but could have far-reaching implications for the social media service if implemented.

Twitter’s board of directors unanimously passed what it called a shareholder rights plan, also known as the “poison pill,” as the battle for control of the social media platform intensified.

“The Rights Plan will reduce the likelihood that any company, individual or group will gain control of Twitter through accumulation in the open market without paying all shareholders a reasonable control premium,” Twitter said in a statement.

Musk sent shockwaves through the tech world Thursday with an unsolicited offer to buy the company, citing promoting freedom of expression on Twitter as the main reason for what he called his “best and final offer.”

The world’s richest person bid $54.20 per share, valuing the social media company at around $43 billion in a filing with the Securities and Exchange Commission released Thursday.

Musk said at a conference in Canada he was “not sure” he would be successful and conceded a “plan B” but declined to elaborate, though he noted in the filing that a rejection prompted him would sell his shares.

Musk last week announced a purchase of 73.5 million shares — or 9.2 percent — of Twitter common stock, an announcement that sent shares skyrocketing more than 25 percent.

The board’s “entitlement plan” takes effect if a buyer acquires 15 percent or more of Twitter’s outstanding common stock in a transaction not approved by the board.

Twitter's board of directors has unanimously approved a so-called shareholder rights plan, also known as the Twitter’s board of directors has unanimously approved a so-called shareholder rights plan, also known as the “poison pill,” in light of billionaire Elon Musk’s bid to buy the company Photo: AFP / Olivier DOULIERY

Musk said he could “technically afford” the buyout without offering any funding information, though he’d likely have to borrow money or divest some of his piles of Tesla or SpaceX stock.

Although he said he wants to take the company private, he said the firm will keep up to 2,000 investors — the maximum allowed.

Some investors have already opposed the proposal, including businessman and Saudi Prince Alwaleed bin Talal.

Analysts at Morningstar Research echoed this view, saying, “While the board will consider the Tesla CEO’s offer, we believe the likelihood of Twitter taking it up is likely below 50 percent.”

Twitter shares closed down nearly 2 percent on Thursday.

Musk’s move adds another curve to the roller coaster ride of his volatile relationship with the global social media service and raises many questions about what’s next.

He was offered a seat on the board but turned it down over the weekend.

Musk is breaking new ground as a business figure, even in the Silicon Valley world known for disrupting markets and transforming lifestyles.

The serial entrepreneur’s aspirations include transitioning to electric vehicles with Tesla, exploring private space and connecting computers to brains.

https://www.ibtimes.com/twitter-adopts-poison-pill-defense-against-musk-buyout-bid-3475760?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution Twitter accepts ‘poison pill’ defense against Musk takeover bid

Brian Ashcraft

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