Poison Pill: Twitter's Board of Directors Adopts Plan to Block Elon Musk's Buyout Offer
16:54 GMT 15.04.2022 (Updated: 12:56 GMT 14.04.2023)
© REUTERS / Rebecca Cook / FILE PHOTO: Elon Musk talks at the Automotive World News Congress at the Renaissance Center in Detroit
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Elon Musk, tech maverick and the world's richest person according to Forbes, has offered to buy Twitter for $43 billion, saying the social media company needs to be taken private. He has already become the largest Twitter shareholder after purchasing 73.5 million shares worth about $3 billion. He now holds a 9.2 percent stake in the company.
Twitter’s Board of Directors has unanimously adopted a new plan to block Elon Musk's buyout offer.
The announcement was made in a press release out Friday, with the plan being okayed “following an unsolicited, non-binding proposal to acquire Twitter", a clear reference to Musk's $43 billion cash takeover offer.
"The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter. The Rights Plan 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", the Board of Directors said in the release.
The poison pill plan was given a green light just a day after Elon Musk slammed possible action by Twitter's Board of Directors against a potentual takeover bid, saying it “would be utterly indefensible not to put this offer to a shareholder vote.” It was revealed earlier this month that Musk now holds a 9 percent stake in Twitter, thus becoming the largest shareholder. The Tesla CEO has, however, refused to have a seat on the company's board.
As a board member, Elon would have been restricted from purchasing more than a 15 percent share of ownership.
Musk made the takeover bid on Wednesday in a letter to the board of Twitter, offering $54.20 per share.
Speaking at a Ted Talk in Vancouver, Musk said Twitter needs to be taken public, adding "I think it's very important for there to be an inclusive arena for free speech".
"Twitter has become kind of the de facto town square. My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important.”
Shortly after his offer, Twitter’s long-time substantial shareholder Prince Alwaleed of Saudi Arabia rejected Musk's takeover, calling his proposal for the company below its value. Prince Alwaleed owns 5.2% of Twitter, raising his stake in the firm with additional stock purchases made in October 2015, according to an image the prince attached to his tweet.
I don't believe that the proposed offer by @elonmusk ($54.20) comes close to the intrinsic value of @Twitter given its growth prospects.
— الوليد بن طلال (@Alwaleed_Talal) April 14, 2022
Being one of the largest & long-term shareholders of Twitter, @Kingdom_KHC & I reject this offer.https://t.co/Jty05oJUTk pic.twitter.com/XpNHUAL6UX
Twitter said its rights plan will expire on 14 April 2023.
