Twitter announced on Friday that its board of directors had unanimously accepted the protection of the “poison pill” in response to a proposal by Tesla CEO Elon Musk to buy the company and make it private.
Twitter said the move, officially called a “limited shareholder rights plan”, aims to enable its investors to “realize the full value of their investment” by reducing the likelihood that anyone will gain control of the company. without paying a shareholder premium. or give the board more time. Poisonous pills are often used to protect against hostile ingestions.
Twitter’s plan will take effect if Musk’s stake rises from about nine percent to 15 percent or more. Even then, Musk could still take over the company by proxy, with the current directors voting. Twitter said the plan did not prevent the board from engaging with parties or accepting a takeover bid if it was in the company’s “best interests”.
Twitter revealed in a stock submission on Thursday that Musk had offered to buy the company directly for more than $ 43 billion, saying the social media platform “needs to be transformed as a private company” to build trust among its users.
“I believe that freedom of speech is a public imperative for a functioning democracy,” Musk said in the document. “I now realize that the company will neither thrive nor serve this social imperative in its current form.”
Tesla CEO Elon Musk, right, was interviewed by TED CEO Chris Anderson at the 2022 nonprofit session in Vancouver on Thursday. Musk offered to buy Twitter and make it private, prompting Twitter’s board of directors to accept protection from a “poison pill” in return. (Stacy McChesney / TED)
Later Thursday, during an interview on the stage of the TED 2022 conference in Vancouver, he said even more broadly: “Having a public platform that is highly trusted and widely inclusive is extremely important for the future of civilization.”
Musk has revealed in regulatory documents in recent weeks that he has been buying shares on Twitter almost every day, starting Jan. 31, ending with a stake of about nine percent. Only the Vanguard Group controls more Twitter shares.
A lawsuit filed Tuesday in the Federal Court in New York alleges that Musk illegally delayed the disclosure of his stake in the social media company in order to buy more shares at lower prices.
After Musk announced his stake, Twitter quickly offered him a seat on the board, provided he limited his purchases to no more than 14.9% of the company’s outstanding shares. But the company said five days later that Musk had refused.
The path to the poison pill is a “predictable” defensive maneuver, although it could be seen as a “sign of weakness” and viewed unfavorably on Wall Street, Wedbush Securities analyst Daniel Ives said in a note in an email.
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