Twitter board adopts poison-pill defense to block Elon Musk takeover
Category: News & Politics
Via: perrie-halpern • 2 years ago • 22 commentsBy: David Ingram and Rob Wile
S E E D E D C O N T E N T
SAN FRANCISCO — Twitter moved Friday to block tech baron Elon Musk's proposed takeover of the social media company, adopting a strategy known as a "poison pill" that's often used to intercept hostile corporate bids.
The Twitter board of directors voted unanimously to adopt the strategy, which is formally known as a shareholder rights plan, the company said in a statement posted online.
The "pill" would be triggered if Musk attempts to buy at least 15 percent of Twitter shares on the open market; currently, the Tesla CEO owns about 9 percent of its stock.
Should the 15-percent threshold be crossed, Twitter's other shareholders — excluding Musk — would be granted the right to purchase additional shares at a discounted price, diluting the overall value of Twitter's stock.
Markets were closed Friday in observance of Good Friday. Twitter shares closed at $45.08 on Thursday
The social media company did not announce at what price shareholders would be able to make those additional stock purchases, but said more details would be forthcoming in a follow-up securities filing.
"The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter," the San Francisco-based company said in its Friday release.
Arun Kumaraswamy, a business and management professor at the Florida International University College of Business in Miami, said the effect of the poison pill is to make Musk's bid more expensive, since he would be locked into buying shares at the price he initially offered — $54.20 per share.
"The goal is to preclude him from being able to pay what he has offered to pay," Kumaraswamy said.
At the same time, Kumaraswamy added, Twitter is attempting to convince its other shareholders that Musk's offer of more than $40 billion is not in their interest, by indicating a higher price could be commanded by some other bidder.
Several news organizations including Bloomberg had reported Thursday that the Twitter board was considering the poison-pill defense. The strategy allows existing shareholders other than the person attempting the takeover to buy additional shares at a discount, diluting the equity of someone like Musk.
Musk on Thursday announced an offer to buy Twitter in a more than $40 billion deal that would take shares of the company's stock off public markets and give Musk complete control. He said Twitter's rules for online speech had become too burdensome, choking off some public debate that should be heard even if it's hate speech.
Twitter did not comment on the details of Musk's proposal, and the company kept open the possibility of reaching a deal for a possible takeover.
"The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders," the company said.
Twitter's annual shareholder meeting is scheduled for May 25, an event that could provide another forum for Musk to air his grievances or seek to influence Twitter's direction.
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Why would NT put up a story that has already been contributed by one of it's members?
I now volunteer my name and my shares in Twitter to any class action lawsuit against Twitter over its fiduciary responsibility to the best interests of its shareholders. The ETF and Mutual fund companies that don’t support the highest possible share value per share should be defendants in such a suit as well.
Good question.
Maybe 'cause your article is a mish-mash of news events, this one is specifically about Musk and Twitter. It's also more up to date.
I think you're confused. I posted the same article the other day.
because this seed is getting/will get more traction due to the person that seeded it?
No, thanks to me questioning it. I see little here related to the article.
Maybe because there is not much to say about it, really.
Yes, I didn't see your second article about Musk/Twitter. You have two up and are bitching because someone seeded a third ? [Deleted]
Cuz Perrie's is a news story and yours was a diatribe?
His wasn’t the only story on the issue presented here.
Wrong again. It was the same story.
[deleted]
Vic I didn't see that you posted the same story. I'm sorry.
No problem. You did much better with it. I'll try and remove mine.
According to Musk the future of civilization is dependent on Twitter. Absolutely absurd.
He’s largely right when it comes to quality of life and freedom. Breaking Twitter free front the content controlling gate keeper censors will be a great 1st step in breaking that whole evil system.
LINK PLEASE
twitter is correct in eliminating unsubstantiated bullshit and russian botnet crap spread by the willfully ignorant right.
The board of directors including Twitter's founder hold very little stock in the company. Their almost non-existent skin in the public companies financial success was exposed today. Shareholders are in shock that decisions are being made recklessly with no consequences to board members. The DOJ will be unable now to block a hostile takeover at this point.
Twitter is going to get a new owner and most likely become a private company despite the media's frivolous tantrums.
I would have sold it for a couple of bil a while back
Yall deal with it now. I will be on my island.