Twitter adopts plan to try to stop Elon Musk from buying social network

Elon Musk rocked the stock and tech world on Wednesday when he announced a proposal to buy Twitter at a price of $43.4 billion, up from its current value of $36 billion. (photo: PHILIP PACHECO/AFP)

Twitter announced this Friday (15) measures to resist public hostile takeover bid by Elon Musk worth US$43 billion, aimed at buying the social network to transform it into a platform that guarantees freedom of expression.

Twitter’s action strategy against the richest man on the planet is known as the “poison pill” in financial parlance.

The move makes it more difficult for a shareholder to accumulate a lot of equity in the company without board approval, activating an option that allows other investors to buy more shares at a discount.

This would greatly increase the price Musk would have to pay to take full control of the social network.

The measure will activate if Musk acquires more than 15% of the company’s shares without the board’s authorization. The South African tycoon, owner of electric car maker Tesla and aerospace company SpaceX, currently holds just over 9% of Twitter’s share capital.

The plan “reduces the likelihood that any entity, person, or group will gain control of Twitter through open market accumulation without paying all shareholders an adequate control premium or giving the board sufficient time to make informed decisions.” explained the San Francisco-based company.

Twitter thus shows that it intends to resist the popular entrepreneur’s proposal to buy the social network and make it a privately held company.

“It was a defensive tactic that was predictable,” said Dan Ives, an analyst at Wedbush. But it will not be viewed “positively” by shareholders, due to the risk of a counterproductive “dilution” of actions.

And the plan is “certainly to be fought in court,” because the board of directors has an obligation to act in the interests of the company and increase its shareholder value.

This Friday, Musk wrote “Thanks for the support!” on the platform, in reference to a survey carried out by the “Bitcoin Archive”, entitled “Do you want Elon Musk to buy Twitter?”, in which 73% of the 19,494 voters answered “yes”.

But he also took his own poll: “Should taking Twitter private for $54.20 be a shareholder issue, not a board issue?” More than 83% of the 2.9 million votes were in favor of “yes”.

always provocative

Elon Musk rocked the stock and tech world on Wednesday when he announced a proposal to buy Twitter at a price of $43.4 billion, up from its current value of $36 billion.

His plan faces challenges on several fronts, including possible rejection and the challenge of raising the money offered, but could have wide repercussions on the social network if it goes ahead.

On Thursday, Musk declared he had “sufficient funds” for the transaction and said he had a plan B if Twitter’s board rejected the offer. Furthermore, he emphasized that he was not looking to cash in on the acquisition during a live interview at the Ted2022 conference.

The billionaire did not elaborate on how he would finance the purchase, but would likely have to go into debt or sell 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, Musk says he wants to make the social network the “freedom of speech” platform, with Fewer limits on what users can write.

Having purchased 73.5 million shares of common stock in the company early last week, he was invited to join the board of directors, but ultimately declined the offer, after offering a series of suggestions for modifying the platform, including adding a button to edit tutes or remove advertising, Twitter’s main source of income.

Adept at polemics and jokes, Musk also published some provocative tweets, questioning whether Twitter is “dying” because some accounts with many followers post little content.

On Thursday, the tycoon acknowledged that he was “not sure he could buy” the company and explained that he hoped to gather as many shareholders as possible in his project. However, he can no longer count on at least one of them.

Saudi Prince Alwaleed bin Talal said on Twitter that he had rejected a very low offer. Musk responded wryly about “media freedom of speech” in Saudi Arabia.

But Musk’s influence and pressure left Twitter executives little choice, said analysts at Wedbush Securities, who believe the social network’s board of directors will have to accept the offer or find another buyer.

“We think this soap opera will end with Musk’s takeover of Twitter following this hostile takeover,” they said in a statement on Thursday, anticipating a wave of potential questions about funding, regulatory aspects and how the billionaire would divide his time between his various companies. .

“The board doesn’t like Musk because it disagrees with him on almost everything and his style is incompatible with the corporate culture” of Twitter, Dan Ives said in an analysis published Thursday in the Daily Mail.

But the board doesn’t have much choice, says Ives, because “Musk seems as determined to run Twitter as SpaceX or Tesla.”