Twitter (TWTR34) Adopts ‘Poison Pill’ Against Elon Musk’s Takeover Offer

Twitter (TWTR34) on Friday adopted a shareholder rights plan known as the “poison pill” to protect itself from Elon Musk’s takeover bid, in a move which will be valid for one year.

It was adopted a day after the founder of Tesla and SpaceX and the richest man in the world made a proposal to buy 100% of the company and go private. The deal would value the social network at more than US$ 43 billion (about R$ 200 billion at the current price).

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On the same day, Musk suggested the possibility of making a hostile offer, bypassing Twitter’s Board of Directors and making the proposal directly to the social network’s shareholders. “It would be totally indefensible not to put this offer to the shareholders’ vote,” the billionaire said in a post on his own Twitter.

The mechanism adopted by the board is valid until April 14, 2023 and provides that shareholders will be able to exercise the right to purchase shares if someone reaches a stake of 15% or more in the company (Musk became the main shareholder of Twitter by buying 9 .2% of the shares outstanding this year).

Musk’s proposal

A regular Twitter user with more than 80 million followers on the social network, Musk has offered to buy all of the company’s shares for $54.20 a share, in a deal that values ​​it at more than $43 billion. $200 billion at current exchange rates).

The billionaire revealed earlier this month that he had bought a 9.2% stake in the social media giant, becoming the company’s biggest investor, which sent Twitter shares up 27% in one day (the biggest rise registered daily).

The next day, Twitter announced it would appoint Musk to the company’s board of directors and the shares rose another 5.89%, but later the billionaire declined the invitation. When the billionaire proposed to buy the social network and go private, however, the shares closed down.

“I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before my investment in Twitter, and a 38% premium over the day before my public announcement of my investment,” Musk said in a letter sent to Twitter president Bret Taylor.

Offer resistance

The Tesla and SpaceX founder stated in the letter that this was his “best and last offer” and that he would reconsider his position as a shareholder if it was not accepted, but the proposed value is below the stock’s peak ($77), reached in February 2021.

Although Musk is currently the richest man in the world, with an estimated fortune of $219 billion according to Forbes, he may have trouble making the deal.

As well as offering an amount of cash he doesn’t currently have in cash, Musk is already facing resistance from one of Twitter’s biggest shareholders, Saudi Prince Alwaleed Talal. The Saudi royal said the offer “doesn’t come close to Twitter’s intrinsic value” and that he will reject it.

Musk is also no longer the company’s biggest shareholder. Asset manager Vanguard recently increased its stake in the social network and reported on the 8th that it now owns 82.4 million shares (10.3% of the total).

meeting with employees

At a general staff meeting on Thursday, Twitter CEO Parag Agrawal told employees that the company has a strong culture of protecting its users and that “nobody can change that,” without citing Musk.

Agrawal declined to discuss details of the offer and said only that the board was reviewing it, but he was also asked about Tesla’s treatment of minority employees (Musk is CEO of the company, which was sued in February by the Department of Fair Employment and California Housing for Alleged Racial Discrimination).

Twitter’s CEO said the social network’s board was taking these issues into consideration and emphasized that diversity is central to the company’s identity. Regarding the California lawsuit, Tesla says the claim is “unfair and counterproductive”.

* With information from Reuters

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