BY Richard Summerfield
The fight for control of social media giant Twitter has intensified in recent days as the company responds to the $43.3bn takeover offer from entrepreneur Elon Musk.
In early April, Mr Musk, the chairman of Tesla, announced that he had become Twitter’s largest stakeholder after quietly acquiring a 9.2 percent stake in the company in recent months. He was then offered a seat on the board, a move that was abruptly reversed after Mr Musk declined. He then made the offer to acquire the company outright.
Mr Musk informed Twitter last week that his $54.20-per-share all-cash bid for the company was his “best and final offer”, and that he would reconsider his position as a Twitter shareholder if it was rejected. He has claimed his offer would help “unlock” the company’s “extraordinary potential”. He also noted that he had made the offer because he believes it is important to have an “inclusive arena for free speech.” Furthermore, he said that if Twitter’s board of directors chose to reject the offer, it would be “utterly indefensible not to put this offer to a shareholder vote”.
In response to the offer, Twitter’s board unanimously approved a plan that would allow existing shareholders to buy stocks at a substantial discount in order to dilute the holdings of new investors. The ‘poison pill’ tactic is the clearest evidence so far that Twitter intends to fight the takeover. It would go into effect if a shareholder were to acquire more than 15 percent of the company in a deal not approved by the board and expires 14 April 2023. Every other shareholder aside from Mr Musk would be allowed to purchase new shares at half the market price, which stood at $45.08 at the end of trading on Thursday last week.
“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,” Twitter said in a statement.
In addition to Mr Musk’s takeover offer, Thoma Bravo, a technology-focused private equity firm that had more than $103bn in assets under management as of the end of December, is also believed to be exploring the possibility of putting together a bid for the company.
Asset manager Vanguard Group said in a filing submitted recently to the Securities and Exchange Commission (SEC) that, as of 8 April, its funds now own a 10.3 percent stake in Twitter, making it the company’s largest shareholder.
Mr Musk is facing legal action over his Twitter share purchases, with one investor launching a potential class action lawsuit against him for failing to disclose his buy-up of shares before the required deadline to do so. Mr Musk is also facing several investigations by the SEC for his investment activities, including insider trading allegations related to his own tweets.
News: Twitter adopts 'poison pill' as challenger to Musk emerges