In a press statement, Twitter’s board of directors revealed that the firm is implementing a limited-term shareholder rights plan, sometimes known as a “poison pill” in merger and acquisition jargon. While Twitter does not mention Elon Musk by name, it is evident that the billionaire is attempting to purchase the social media platform. Twitter is now owned by Elon Musk, who owns 9.2 percent of the company. According to a filing with the US Securities and Exchange Commission, he made an offer to buy 100 percent of the company’s stock yesterday. Musk has stated that he is willing to pay $54.20 per share for Tesla stock. It would be an all-cash deal for $43.4 billion for the social network.
While it appears to be a large sum, Musk’s offer isn’t very generous. Just a few months ago, Twitter’s stock was trading near $60. Although IT stocks are now on the decline, Twitter appears to be performing well at the moment. “I believe it is critical to have a welcoming environment for free expression.” “Because Twitter has become a de facto town square,” Musk said at a conference yesterday, “it’s critical that people have both the reality and the impression that they can talk freely within the confines of the law.” Later in the conversation, he stated, “I don’t care about economics at all.”
Kyle Wiggers of TechCrunch wrote down how hostile takeovers normally go place. One technique to thwart a hostile takeover attempt is to use a poison pill. A poison pill’s ultimate purpose is to diminish Musk’s ownership position. The Wall Street Journal reported earlier this week that Twitter was considering implementing a poison pill. Existing Twitter shareholders will be allowed to acquire more shares at a discount for a short time under certain conditions. Other shareholders can acquire more shares if a business, person, or group reaches a threshold, in this example a 15% holding in Twitter. This manner, intentions to purchase more than 15% of the firm would be staggered.
“The Rights Plan will reduce the likelihood that any entity, person, or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or providing the Board with sufficient time to make informed decisions and take actions in the best interests of shareholders,” Twitter wrote. Of Nevertheless, if the company’s board wants to move through with an acquisition deal, board members can vote to authorize an ownership stake of more than 15%. The poison pill’s expiration date is April 14, 2023.