Twitter is working to block Elon Musk’s attempt to take over the billionaire by using the use of a “poison pill” which is a type of financial tool that firms have used against unwelcome suitors for a long time.
Musk, the Tesla as well as SpaceX CEO on Thursday made an offer to buy all shares of Twitter that he doesn’t have at $54.20 for each share which would value Twitter as $41.4 billion. It’s an increase of 38% over the closing price of April 1, the final trading day prior to when Musk announced that he had become the largest shareholder of Twitter, in addition to an 18% gain over the price it was trading at on Wednesday. The offer was made just 10 months after Musk first announced the fact that he was now Twitter’s biggest shareholder (he has since been surpassed by Vanguard Group).
Twitter’s board of directors implemented a limited-term shareholder rights plan dubbed”poison pill “poison pill” which could make it more difficult for Elon Musk to acquire the company.
“Poison pill” provision, announced in a press release Friday “poison pill” clause, which was revealed in a news release released on Friday will allow Twitter shareholders that aren’t Musk to buy more share of the business for the cost of a reasonable amount which effectively reduces Musk’s stake. The policy will take effect when Musk (or anyone else) purchases more than 15 percent of shares of the company. Musk is currently holding approximately 9 percent of the shares owned by Twitter.
This move is a bid by Twitter’s board to wrestle back some control over the deal following Musk’s shocking acquisition offer. This poison pill an corporate anti-takeover defense mechanismwill not necessarily stop Musk’s offer from advancing but it could result in purchasing the company more expensive or even force Musk to sit down for a discussion in conjunction with his board.
“The Rights Plan will reduce the possibility that an individual, group or entity has control over Twitter through the open market without paying shareholders a fair control premium, or not giving the Board enough time to make an informed decision and to take actions best for investors,” The company stated in its announcement.
The following day, Musk offered to buy Twitter and the announcement came only days following the Tesla CEO announced that he would not be joining the company’s board of directors.
He made $54.2 for Twitter’s stock. He called the price his top and final price.
The Twitter board of directors showed that it won’t be silent, stating that any acquisition that exceeds 15% of the company’s stock without approval from the board would be a trigger for an attempt to inundate stocks, and making a buyout more difficult.
What do poison pills are meant to be doing?
The components in each of the poison pills are different However, they’re designed to offer corporate boards the option to take over the market by flooding it with such a large amount of newly created stock that taking over costs too much.
The tactic was popularized in the 1980s , when publicly-owned companies were being targeted by corporate raiders like Carl Icahn – now more commonly referred to by the term “activist investor”.
Twitter did not release the specifics of its poison pills on Friday, but did say it will give more details in its upcoming submission to the Securities and Exchange Commission, which it delayed due to the markets for public trading were shut on Friday.
Musk is currently holding a 9 per cent stake.
Is a poison pill a tactic for negotiation?
Although they’re intended to prevent an unintentional purchase, poison pills often allow more negotiations, which could force an interested party to offer a sweeter deal.
As usual, Twitter left its door open, stating that its poison pill would hinder it from “engaging in a variety of parties or approving an acquisition offer” with a higher cost.
The practice of taking a poison pill frequently leads to lawsuits alleging that a corporation’s board and management team are employing the strategy to protect their job in their shareholders’ best interest.
Elon Musk deals Twitter a wild card while shareholders demand reforms
The ruckus over Elon Musk’s attempt to take over of Twitter has produced the most hilarious non-intentional comedy.
Musk might be on his way to purchasing the social media giant Twitter at a price of $43 billion! If the deal is approved, expect major adjustments to come in quick.
The first one is, as one would be inclined to believe that the president was reinstated an ex-president.
Because Musk claims to be an absolute believer in free speech Maybe it’s possible that under his direction, Twitter will cease to be in the practice of censoring people who are on the right or excluding those who don’t adhere to the dictates of blue-check, left-wing Twitter.
Some stories that could be problematic to Democrats who are in charge won’t be dismissed.
Liberal riots over the Musk Twitter’s takeover are the greatest non-intentional comedy of all time: Concha
This is a frightening prospect to “conservatives” such as that of the Washington Post’s Max Boot. Boot tweeted “I am scared by the potential impact on the political and social landscape in the event that Elon Musk buys Twitter. He appears to believe the social network is a place where, anything is possible. In order for democracy to last we require more moderation of content not less.
Frightened? If Musk is successful, then democracy will go dark? C’mon man!
- What is Twitter’s ‘poison pill’ and what is it supposed to do? Al Jazeera English
- Twitter adopts ‘poison pill’ measure that could thwart Elon Musk’s takeover bid CNN
- Twitter board adopts ‘poison pill’ after Musk’s $43 billion bid to buy company CNBC
- Liberal meltdowns over Musk Twitter takeover are the best unintentional comedy ever: Concha Fox News
- Analysis: Elon Musk deals Twitter a wild card as shareholders seek reforms Reuters
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