Twitter passes ‘poison pill’ measure that could thwart Elon Musk’s takeover bid

The “poison pill” provision, announced in a Friday press release, preserves the right of Twitter shareholders other than Musk to acquire more shares of the company at a relatively cheap price, diluting Musk’s stake . The disposition will be triggered if Musk (or any other investor) acquires more than 15% of the company’s shares. Musk currently owns about 9% of Twitter shares.
The move marks an effort by Twitter’s board to regain control of the deal after Musk’s stunning takeover bid. The poison pill – a corporate takeover defense mechanism – won’t necessarily stop Musk’s bid in its tracks, but it could make buying the company more expensive or force Musk to the negotiating table with the board of directors.

“The Rights Plan will reduce the likelihood that any entity, person or group will gain control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or giving the board enough time to make informed judgments and take actions that are in the best interests of shareholders,” the company said in its statement.

Musk’s first public statement after Twitter’s announcement came Friday afternoon, via a tweet quoting a Twitter poll by the @BTC_Archive account asking, “Do you want Elon Musk to buy Twitter? ?”

“Thanks for your support!” the billionaire wrote while sharing the poll, which at the time of writing had a majority of respondents voting “Yes”. Musk did not respond to a request for comment from CNN Business.

The Tesla and SpaceX CEO on Thursday offered to acquire all shares of Twitter he does not own for $54.20 per share, valuing the company at $41.4 billion. That’s a 38% premium to the April 1 closing price, the last trading day before Musk revealed he had become Twitter’s largest shareholder, and an 18% premium to its stock price. closes Wednesday. The deal offer came 10 days after Musk first revealed he had become Twitter’s largest shareholder (it has since been eclipsed by Vanguard Group).

The offer capped a 10-day blitz in which Musk revealed he had become the company’s largest shareholder, accepted a board position only to give it up, and tweeted throughout. of how Twitter might be dying and should consider dropping the “w” from its name, among other suggestions.

The company now appears to be gearing up for what could be a never-ending acquisition drama.

Wedbush analyst Dan Ives called the poison pill a “predictable defensive move” by Twitter’s board and added, “We believe Musk and his team were expecting this poker move.” Ives also noted that there is a risk that Twitter’s plan could be challenged by Musk or other shareholders in court, which could put the board in a position to argue that the plan was in the best interests of the shareholders. shareholders.

Even so, there seem to be genuine doubts about whether Musk, a successful but sometimes erratic entrepreneur who found himself in hot water with regulators in 2018 after falsely suggesting he had secured funding to privatize Tesla is serious about pursuing the deal. .

Despite being the richest man in the world, one wonders how he would come up with the money to fund the nearly $42 billion deal. Musk himself admitted in an interview on Thursday that getting a deal would be difficult, saying, “I’m not sure I can acquire it.”

Twitter’s stock fluctuated a bit on Thursday but remained mostly flat, closing around $45, well below Musk’s offer price of $54.20 per share. The lack of enthusiasm – unusual after a takeover bid – suggests investors’ skepticism about the pending deal.

Twitter’s poison pill plan will remain in effect for a year, the board said. More details of the plan are expected to be filed with the Securities and Exchange Commission, which is not yet publicly available.

— Rishi Iyengar of CNN Business contributed to this report.

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