Twitter uses poison pills to combat musk control

Twitter on Friday announced its counter-attack against Elon Musk, using a tactic to block corporate raiders in an attempt to block the capture by the world’s richest man.

This strategy, known as the poison pill, if Mr. Musk, or any other person or group, works together to buy 15% or more shares of Twitter, which will fill the market with new shares. This would immediately reduce Mr. Musk’s stock and make it even more difficult for him to buy the company’s large drug. Mr. Musk currently owns more than 9% of the company’s stock.

The purpose is to force someone to try to get the company to negotiate directly with the board. Investors sometimes try to break the boundary of a poison bullet, security experts say, with the caution that Mr Musk is at least able to advance.

Companies are often wary of using poison pills because they do not want to see shareholders unfriendly. Still, some critics, such as institutional shareholder services, an influential consulting group, have shown that they are open to strategy in certain situations.

Twitter said the mechanism will not prevent the company from negotiating a sale with any potential buyer and will allow them more time to negotiate a deal that offers a substantial premium.

The bullet “does not mean that the company will be free forever,” said Deru Pascarella, senior lecturer in finance at Cornell University. “That means they can effectively stop Elon.”

Mr Musk announced his intention to seek social media service on Thursday, making the public an unacceptable bid of more than $ 40 billion. In an interview later that day, he took issue with Twitter’s moderate policies, called Twitter “de facto town square” and said “it’s really important that people have the fact and the perception that they are able to speak freely. “The law.”

He also said he had a Plan B if the board rejected his offer, though he did not share it.

Analysts said that Mr Musk’s bid – which offers higher shares per share than current stock prices but down from its peak last year – may slow the company down. They have also raised concerns about Mr Musk’s ability to collect financing. If the board negotiated a deal with Mr Musk, it could include a hefty breakup fee that could put an end to concerns about his unstable nature, which conflicts with the deal’s ability to close, some security. The lawyers said.

Twitter has tried to seduce the world’s richest man over the past week as it shut down parts of it. Last week, Twitter offered Mr Musk a board seat, but he was angry with the management when it became clear that he would no longer be able to criticize the company freely. He canceled the role on Saturday and notified Twitter of his acquisition plans on Wednesday evening.

Twitter said in a statement that its poisoning plan, which will remain in effect until April of next year, is “similar to other plans approved by publicly-held companies in competitive situations.”

Other top shareholders of Twitter, according to FactSet, include investment giant Vanguard Group, the largest, with a 10.3% stake; Morgan Stanley Investment Management, with 8% stakes; And BlackRock Fund Advisor, with a 4.6% stake.

Arch Investment Management, led by Kenwood, a star in the reddit investment community that has previously bet on Mr. Musk, has a 2.15 percent stake. One of Twitter’s founders, Jack Dorsey, who befriends Mr. Musk, owns a 2.2 percent share. Twitter’s board, which includes Mr Dorsey, unanimously voted to approve the poison pill.

Mr Musk seemed to be getting ready for a long fight on Thursday. “Twitter should go private at $ 54.20 on shareholders, not boards,” he tweeted, with a yes / no poll.

Mr. Musk’s opening, bare bones presents open-ended questions. Mr Musk has hired Morgan Stanley to advise on the bid, though the investment bank is not known for its large-scale financial financing. And Twitter shareholders look cautious: Twitter stock fell nearly 2 percent on Thursday, closing at $ 45.08 – especially following Mr Musk’s offer. The stock markets in the United States closed on Friday, Friday.

Saudi Arabia’s prince, Alwaleed bin Talal, who has declared himself one of Twitter’s biggest and long-term shareholders, said on Thursday that Twitter should reject Mr Musk’s offer because it was enough to show the company Was notIntrinsic valueAnalysts also suggested that Mr Musk’s pricing was too low and did not reflect recent Twitter activity.

Mr Musk argued that going private would allow Twitter to have more free speech on the platform. “My strong sense of belonging is that having a public platform that is so trusted and widely inclusive is crucial to the future of civilization,” he said in an interview at a TED conference on Thursday.

He also insists that the algorithm uses Twitter to rank its content, deciding what millions of users see on the service each day, to be public for users to audit.

Mr Musk’s concerns have been shared by several executives on Twitter, who have also called for greater transparency about his algorithm. The company has published Internal research Their algorithm funded efforts to create an open, transparent standard for discrimination and social media services.

But Twitter stood by Mr Musk’s hardball strategy. After Thursday morning’s board meeting, the company began exploring options to block Mr Musk, which includes a poison pill and the possibility of suing another buyer.

During an all-hands meeting on Thursday, Twitter’s chief executive, Parag Aggarwal, tried to reassure employees about potential bullying. Although he declined to share details about the board’s plans, he encouraged employees to remain focused and not allow themselves to be distracted by Mr. Musk.

This is a developing story. Check back for updates.

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