The strategy allows existing shareholders to buy additional shares at a discount and is valid for one year.
By Gillian Ward Bloomberg
Published April 15, 2022, April 15, 2022
Twitter Inc. adopted a measure that would protect it from hostile takeover bids by taking steps to thwart billionaire Elon Musk’s unwanted offer to make the company private and turn it into a bastion of free speech.
The Council has set up a shareholder rights plan, which can be exercised if a country acquires 15% of the shares without prior approval, lasting only one year. The plan aims to ensure that anyone who takes control of Twitter by accumulating an open market pays all shareholders an appropriate control premium, according to a statement Friday.
Twitter has accepted the plan to buy time, according to someone familiar with the issue. The board wants to be able to analyze each transaction and still be able to accept it.
“The rights plan does not prevent the board from engaging with parties or accepting a takeover bid if the board believes it is in the best interests of Twitter and its shareholders,” the company said.
The CEO of Tesla Inc. on Thursday, it offered $ 54.20 per share in cash for Twitter, valuing social media company at $ 43 billion. Musk, who said it was his “best and last” offer, has already amassed more than 9% on Twitter earlier this year. The Twitter board met on Thursday to review Musk’s proposal to determine if it is in the best interests of the company and all its shareholders.
The poison pill protection strategy allows existing shareholders the right to buy additional shares at a discount, effectively diluting the property interests of the hostile country. Poison pills are common among companies under fire from investor activists or in situations of hostile takeovers.
Under Twitter’s plan, each right will entitle its holder to purchase, at the current exercise price, additional shares of ordinary shares with a market value at present, double the exercise price.
‘Love it’
Musk’s securities document revealing the offer Thursday morning contained a script of text he sent to the company. In it, he said: “The price is high and your shareholders will like it.”
However, at least one prominent investor said the offer was too low and the market reaction seemed to agree. Saudi Arabia’s Prince Alwaleed bin Talal said the deal was not “close to the inherent value” of the popular social media platform.
Speaking at a TED conference later Thursday, Musk said he was not sure he “could actually get it”. He added that he also intended to retain “as many shareholders as the law allows” instead of retaining the company’s sole ownership.
Shares of Twitter fell 1.7 percent in New York on Thursday, reflecting market opinion that the deal is likely to be rejected or failed. The Wall Street Journal reported earlier that the San Francisco-based company is considering protection from poison pills.
Musk first revealed his stake in Twitter on April 4, making him the largest individual investor. At the TED conference, he said he had a plan B if the Twitter board rejected his proposal. He declined to give details. But in his submission earlier in the day, he said he would reconsider his investment if the offer failed.
“If the deal doesn’t work, given that I don’t trust management or believe I can bring about the necessary change in the public market, I will have to reconsider my position as a shareholder,” Musk said.
“With the help of Sarah Freer.”
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