On Friday Twitter announced that its board of directors has adopted the “poison pill” defense to thwart Tesla CEO Elon Musk from acquiring the company through a hostile takeover in his bid to restore free speech.
The “limited duration shareholder rights plan,” according to Twitter, will allow its investors to “realize the full value of their investment” by reducing the likelihood that a single person can take over the company, without either giving the board of directors more time or paying shareholders a premium.
If Musk’s nearly 10% stake grows to 15% or more, Twitter’s plan would take effect, stopping him from buying more. The defensive measure does not seem to preclude Musk’s offer to buy Twitter.
Should Twitter deny Musk’s offer to buyout the company and take it private, the African American billionaire still has the capability to take over the company, should his allies buy out unfriendly shareholders and eventually empower Musk to vote out the current directors on the board and fire CEO Parag Agrawal.
For its part, Twitter said the limited duration shareholder rights plan won’t prevent the board from engaging with third parties or accepting an acquisition proposal as long as it’s in Twitter’s “best interests.”
However, a Saudi Prince who owns a significant stake in Twitter already said that Musk’s offer isn’t high enough.
Yesterday, Musk offered over $54 per share – around $54 billion total – to buy Twitter and take it private. This is nearly twice the $30 that Goldman Sachs estimated Twitter shares would sell for around this time.
— Elon Musk (@elonmusk) April 14, 2022
Musk appears to have already considered his next move, or “Plan B” should the poison pill option be used.
Ahead of Twitter’s latest defensive move, Cryptocurrency investor Cameron Winklevoss appeared to accurately predict on Thursday that “Twitter is considering a poison pill to thwart @elonmusk’s offer,” adding that the company “would rather self-immolate than give up their censorship programs.”
“This shows you how deeply committed they are to Orwellian control of the narratives and global discourse,” added Winklevoss. “Scary.”
In response to Winklevoss’ tweet, Musk stated that “If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty,” Valiant News previously reported.
Poison pills are often used to defend against “hostile takeovers,” but some suggested other defensive measures Twitter could take might harm the company or its shareholders, and thus give Musk the right to sue for acting against the financial interests of the company and breaching their fiduciary duty.
Musk previously stated that “there is” a Plan B to restore free speech to Twitter should the company reject his bid to to buy the company during a Ted Talk on Thursday, but provided no further details.
“I think it’s very important for there to be an inclusive arena for free speech,” Musk said. “Twitter has become kind of the de facto town square, so it’s really important that people have both the reality and perception that they’re able to speak freely within the bounds of the law.”
