Main Highlights:
- In a press statement, Twitter’s Board of directors announced that the company is implementing a limited-term shareholder rights plan – often referred to as a “poison pill” in mergers and acquisitions terminology.
- While Twitter did not mention Elon Musk directly, the company aims to prevent the billionaire from acquiring the social network.
- Since Twitter has developed into a de facto town square, Musk stated at a conference yesterday that it is critical for people to have both the reality and perception of being allowed to talk freely within the confines of the law.
- The Rights Plan would then reduce the likelihood that any institution, person, or group will acquire control of Twitter through marketplace accumulation without needing to pay all shareholders a reasonable control premium or providing the Panel with adequate time to make informed decisions and act in the best interests of shareholders, Twitter wrote.
- Naturally, if the company’s Board of directors decides to proceed with an acquisition, board members may vote to permit ownership of more than 15% of the company.
The Board of directors of Twitter revealed in a press statement that the firm is implementing a limited-term shareholder rights plan – a “poison pill” in mergers and acquisitions parlance. While Twitter does not explicitly mention Elon Musk, the firm is attempting to dissuade the billionaire from acquiring the social network.
Currently, Elon Musk holds a 9.2 percent stake in Twitter. He made an offer to buy all of the company’s shares yesterday, according to a filing with the Securities and Exchange Commission in the United States. Musk has indicated that he is prepared to pay $54.20 a share. It would be a cash-only transaction valued at $43.4 billion.
While it appears to be a large sum, Musk’s offer is not. A few months ago, Twitter’s stock was trading far above $60. While technology companies are now through a big selloff, Twitter appears to be doing very well. He believes it is critical to provide an inclusive space for free expression. Because Twitter has evolved into a de facto town square, it is essential that people have both the reality and perception of being allowed to talk freely within the law, Musk stated yesterday at a conference. He said later in the interview that he is unconcerned with economics.
Kyle Wiggers of TechCrunch detailed how hostile takeovers often unfold. Additionally, administering a poison pill is one method of thwarting a takeover attempt. A poison pill’s ultimate purpose is to diminish Musk’s ownership position. The Wall Street Journal reported that Twitter was considering introducing a poison pill earlier this week.
Twitter’s Shareholders
Existing Twitter shareholders will have the opportunity to acquire more shares at a discount under specific circumstances for a limited period. If a corporation, individual, or group reaches a certain level, such as a 15% interest in Twitter, other shareholders can purchase further shares. This would delay ambitions to acquire more than 15% of the firm.
As Twitter explained in a blog post, the Rights Plan will make it more difficult for a single entity, person, or group to gain control of the company through open market accumulation without paying all shareholders an adequate control premium or giving the Board adequate opportunity to produce informed decisions and act in the interests of stockholders.
Naturally, if the firm’s Board of directors wishes to proceed with an acquisition deal, board members may vote to authorize ownership of more than 15% of the company. The poison pill is still effective as of April 14, 2023.
