Twitter announced this Friday measures to resist the hostile takeover bid launched by Elon Musk for 43,000 million dollars, aimed at buying 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,” Wedbush analyst Dan Ives reacted. 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.
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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.
Very active and popular on Twitter, where he has about 82 million followers, but at the same time very critical of the platform’s content moderation policy, he says he wants to turn it into the platform for “freedom of expression”, with less limits on what users can tweet.
Having bought 73.5 million shares of the company’s common stock earlier last week, he was invited to join its board of directors but ultimately turned down the offer, following a series of suggestions to modify the platform, including adding of a button to edit tweets or the removal of advertising, Twitter’s main source of income.
Adept at controversy and jokes, he also chained some provocative tweets, wondering if Twitter was not “dying” because some accounts with many followers publish little content.
On Thursday, the tycoon acknowledged that he was not “sure if he could buy” the company and explained that he hoped to gather as many shareholders as possible in his project.
You will no longer be able to count on at least one of them.
Saudi Prince Alwaleed bin Talal said on Twitter that he was rejecting an offer that was too low, to which Musk responded by ironically about “media freedom of expression” in Saudi Arabia.
But Musk’s influence and pressure left Twitter leaders little choice, analysts at Wedbush Securities said.
For their part, Wedbush analysts said Twitter’s board of directors will have to accept the offer or find another buyer.
“We think that this soap opera will end with the acquisition of Twitter by Mr. Musk after this hostile takeover,” they said in a note on Thursday, anticipating a wave of possible questions about financing, regulatory aspects and how the billionaire would divide his time between his various companies. .
“The board doesn’t like Musk because they disagree on almost everything and his style is incompatible with their corporate culture,” Dan Ives stressed in an analysis published Thursday in the Daily Mail.
But the board doesn’t have much choice, he said, because “Musk seems as determined to run Twitter as SpaceX or Tesla.” (I)
Source: Eluniverso
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