Twitter says poison pill makes ‘coercive’ takeover difficult
DETROIT — Twitter’s board of directors says it adopted a “poison pill” defense in order to protect the social media platform from “coercive or otherwise unfair” takeover tactics.
A rights agreement enacted by the board would give shareholders as of April 25 the right to buy one one-thousandth of a share of preferred stock for each common share they own, at a price of $210 if any person or group of investors acquire 15% or more of the company’s shares without board approval, Twitter said in a Monday filing with the U.S. Securities and Exchange Commission. The preferred stock would have the same voting right as a common shares. It would allow existing shareholders to vote more, making it more difficult for investors to take control of the company. Musk is not mentioned in the filing.
” The agreement could “render more difficult, or discourage a merger.
Despite the poison pill defense the board still leaves open the possibility to negotiate with Musk or other suitors. According to the filing, the rights agreement should not be in conflict with any merger, offer, or other business combination that the board approves.
Twitter’s board hasn’t formally rejected Musk’s offer. Wedbush Securities analyst Daniel Ives said it was interesting that Twitter first filed the shareholder rights plan before turning Musk down, but he expects the rejection to come in the next 24 to 48 hours.
“Taking Twitter private at $54. 20 should be up to shareholders, not the board,” Musk tweeted on Thursday. Musk also stated that if the current Twitter board acts against shareholder interests, they would be violating their fiduciary obligation. The liability they would thereby assume would be titanic in scale.”
Twitter said in a filing Thursday that Musk offered to buy the company for more than $43 billion. Musk stated that Twitter must be transformed into a private company to build trust and serve the “societal imperative” for free speech.
Musk deemed the offer final, but he did not provide any details about financing. These details could increase his chances of purchasing the company. Musk could borrow billions of dollars using his SpaceX and Tesla stakes as collateral.
Shares of Twitter rose nearly 3% to $46. 38 in Monday morning trading, still $7. 82 shy of Musk’s offer. This is a sign that investors are skeptical about Musk’s ability to complete the deal.
Musk revealed in regulatory filings over recent weeks that he’d been buying Twitter shares in almost daily batches starting Jan. 31, ending up with a stake of about 9%. Only Vanguard Group has more Twitter shares. A lawsuit was filed Tuesday in New York federal court alleging that Musk illegally delayed disclosing his stake to the social media company in order to buy more shares at lower prices.
On Monday, Musk posted on Twitter that he would not pay board members if his offer succeeds. He wrote that this would save Twitter $3 million annually.
O’Brien reported from Providence, Rhode Island.
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