Twitter is moving forward to battle Musk’s offer of $43 billion
Twitter Inc has announced that its Board of Directors has unanimously adopted a limited duration shareholder rights plan following an unsolicited, non-binding proposal to acquire Twitter by Tesla CEO Elon Musk.
According to the announcement made on Friday, “The Rights Plan, often called the “poison pill“, will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
That would immediately dilute Musk’s stake and make it significantly more expensive for him to buy the company. Musk currently owns a little more than 9 percent of Twitter’s stock.
The poison pill injects another twist into a melodrama surrounding the possibility of the world’s richest person taking over a social media platform he described Thursday as the world’s “de facto town square.”
Twitter said its plan would reduce the likelihood that any one person can gain control of the company without either paying shareholders a premium or giving the board more time to evaluate an offer. Such defences, formally called shareholder rights plans, are used to prevent the takeover of a corporation by making any acquisition prohibitively expensive for the bidder.
The company added, “The Rights Plan does not prevent the board from engaging with parties or accepting an acquisition proposal if the board believes that it is in the best interests of Twitter and its shareholders.”
The Rights Plan is similar to other plans adopted by publicly held companies in comparable circumstances. Under the Rights Plan, the rights will become exercisable if an entity, person, or group acquires beneficial ownership of 15 percent or more of Twitter’s outstanding common stock in a transaction not approved by the board, it noted.
The Tesla owner has earlier made an offer to buy Twitter and pay $54.20 per share to buy 100 percent of the company. The all-cash offer will value the social network company at about $43 billion. He also acknowledged he was “not sure” if he would actually be able to buy Twitter, adding that there is a Plan B if his initial offer is rejected.
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