Twitter’s board of directors has adopted a shareholder agreement that could stop Elon Musk’s attempt to seize control of the company.
The so-called “poison pill” would prevent Musk from outright buying the company.
🚨BREAKING🚨
— unusual_whales (@unusual_whales) April 15, 2022
Twitter, $TWTR announced that its Board of Directors has unanimously adopted a limited duration shareholder rights plan (the "Rights Plan").
The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter.
Per CNN:
The move marks an effort by Twitter’s board to wrest back some control in the deal after Musk’s stunning acquisition offer. The poison pill — a corporate anti-takeover defense mechanism — won’t necessarily stop Musk’s bid in its tracks, but it could make buying the company more expensive or force Musk to the negotiating table with the board.
Musk previously offered to buy Twitter for $43 billion. On Thursday, the business magnate told an audience in Vancouver that the attempted buyout wasn’t about money, saying, “My strong, intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. I don’t care about economics at all.”
Axios’ Jacob Knutson and Sara Fischer explain how the “poison pill” dilutes Musk’s ownership stake:
How it works: The move is designed to make it difficult for anyone, including Musk, to build a stake worth more than 15% of the company.
A poison pill gives existing shareholders the ability to purchase additional shares in the company at a discount, which in turn dilutes the stake of the person or party seeking to buy the company.
Musk revealed he had purchased a 9.2% stake in Twitter earlier this month.
American Liberty News recently reported on the latest twists and turns in Musk’s takeover bid — and hinted at what the billionaire might do next:
At roughly the same time, the battle for Twitter’s future took another interesting turn Thursday. Asset manager Vanguard Group confirmed in a filing with the Security and Exchange Commission that it owns a 10.3% stake in the company, making it — not Musk — the largest shareholder.
Speaking to Chris Anderson at TED2022, Musk admitted he’s “not sure” if his takeover bid will be successful. When asked by Anderson if there was a “Plan B” if his offer were rejected, the world’s richest man said, “there is.”
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Let the shareholder lawsuits start!
Musk will sue. As a stockholder, the board owes him responsibility as the fiduciary. If he sells and loses money, he has a strong case. If he holds, he has a case for the board not acting in the best interest of the shareholders.