Twitter adopts poison pill in fightback against Elon Musk’s bid

Twitter adopts poison pill in fightback against Elon Musk’s bid

 

 

Twitter shares gained on Monday after the social media company launched a poison pill defence to thwart an unsolicited bid by Elon Musk to take the company private at $54.20 a share.

 

A securities filing on Monday confirmed the strategy Twitter outlined last week; which would allow the company to issue new stock that all shareholders except Musk could buy at a discounted price.

 

It imposes a “significant penalty” on any person or entity that would acquire more than 15pc of the company without board approval, according to the filing.

 

Mr Musk currently owns just over 9pc of Twitter shares.

 

“The board adopted the rights agreement to protect stockholders from coercive or otherwise unfair takeover tactics,” according to the filing.

 

The stock rose 3.8pc to $46.78 (€43.41) at 1:00 p.m. in New York.

 

Twitter is using the poison pill defence to buy time to come up with a plan that would be in the best interests of its shareholders, according to a person familiar with the company.

 

The shares are gaining amid speculation that Twitter will strike a deal that is more palatable to shareholders.

 

ALSO READ: Elon Musk has means to thwart Twitter’s ‘poison pill’

The company has been fielding takeover interest from other parties; including technology-focused private equity firm Thoma Bravo, according to a person familiar with the matter.

 

Private equity firm Silver Lake, which already owns a significant stake in Twitter; also would make sense as a partner since it has an existing relationship with Musk, but it’s unclear if they’re interested.

 

Meanwhile, Mr Musk may partner with Oracle and a private equity consortium that includes Thoma Bravo to thwart Twitter’s poison pill; according to Bloomberg Intelligence analysts; “while raising the bid 10-15pc to about $50bn.”

 

Mr Musk has said that any rejection of his bid, valuing Twitter at $43bn; would cause him to re-evaluate his stake.

 

Over the weekend; he said that the economic interests of Twitter’s board aren’t aligned with shareholders.

 

He was responding to a tweet about board members’ stock holdings; saying that with the impending departure of co-founder Jack Dorsey; the board “collectively owns almost no shares.”

 

In a tweet on Monday, Mr Musk; who is also chief executive officer of Tesla, said if his Twitter bid succeeds, board members would not be given a salary.

 

Tesla has paid its own directors an annual cash retainer of about $20,000 plus certain additional fees in recent years; but they also each receive stock option grants every few years, meaning they stand to make tens of millions of dollars or more with Tesla’s stock price gains.

About The Author

Osigweh Lilian Oluchi is a graduate of the University of Lagos where she obtained a B.A (Hons) in English, Masters in Public and International affairs (MPIA). Currently works with 1stnews as a Database Manager / Writer. [email protected]

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