Twitter announced this Friday measures to resist the hostile takeover bid launched by Elon Musk for US$ 43,000 million, destined to buy the social network to transform it into a platform that guarantees free expression.
Twitter’s stock strategy against the richest man on the planet is known as a “poison pill” in financial jargon.
The move makes it harder for one shareholder to accumulate too much stake without board approval, by activating an option that allows other investors to buy more of the company’s shares at a discount.
That would greatly increase the price that Musk would have to pay to take full control of the social network.
It will be activated if Musk exceeds 15% of shares in the company without the authorization of the board. The South African tycoon, owner of the electric car company Tesla and the aerospace company SpaceX, currently owns a little more than 9% of Twitter’s share capital.
The plan “will reduce the likelihood of any entity, person or group gaining control of Twitter through open market accumulation without paying all shareholders an adequate control premium or giving the board of directors sufficient time to make decisions. informed,” said a statement from the San Francisco-based company.
Twitter thus shows that it plans to resist the popular businessman’s proposal to buy the social network and make it a closed capital company.
“It’s a defensive tactic that was predictable,” said Wedbush analyst Dan Ives. But it will not be perceived “in a positive way” by the shareholders, due to the risk of a counterproductive “dilution”.
And the plan will “certainly be fought in court” because the board of directors has an obligation to act in the interest of the company and to increase its value for shareholders.
always provocative
Elon Musk rocked the stock and tech world on Wednesday when he announced a proposal to buy Twitter at a price that would take it to $43.4 billion, up from its current value of $36 billion.
His plan faces questions on several fronts, including possible rejection and the challenge of raising the money offered, but it could have wide-ranging repercussions on the social network if it comes to fruition.
On Thursday, he declared that he has “sufficient funds” for the transaction and said he had a plan B if Twitter’s board rejected the offer. Also, he stressed that he was not looking to make money from the acquisition, during a live interview at the Ted2022 conference.
He did not elaborate on how he would finance the purchase, but he would likely have to go into debt or divest some of his Tesla or SpaceX shares.
