Twitter’s board doesn’t seem happy with Elon Musk’s offer and wants to block the offer through a “shareholder rights plan.”
According to The Verge, the Twitter board has released a statement to clarify their actions against Musk’s offer. The board says they adopted the plan “following an unsolicited, non-binding proposal to acquire Twitter”. This could be a big damage to Musk’s efforts and vanish his hopes for acquiring the 100-percent of Twitter.
“The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter.” Twitter’s board noted. “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 without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
In the financial dictionary, this is known as “poison pill,” whose goal is to block any outsider attempts to seize the company by letting existing shareholders buy new shares of a company.
The board is in contact with the US Securities and Exchange Commission over its plan. They even detailed their plan in a filing offered to the SEC.
Twitter’s board blocks Musk from acquiring 100 percent of the company
Elon Musk has recently bought 9.2-percent of Twitter for $2.89 billion. Then, some sources reported that Musk would join Twitter’s board, and the news created a lot of excitement among Musk’s fans.
However, Twitter CEO Parag Agrawal later denied the news and said Musk would remain as a shareholder. After that, Musk officially requested to buy 100-percent of Twitter for over $40 billion.
Joining Twitter’s board could prevent Musk from acquiring more than a 15-percent of the company. However, Musk is now Twitter’s largest individual shareholder.
Of course, the board’s action to block the buyout offer would not be a pleasing news to Musk. Musk said it “would be utterly indefensible not to put this offer to a shareholder vote.” Also, Musk said if he fails to acquire 100 percent of the company, he “would need to reconsider [his] position as a shareholder.”
Changing Twitter’s moderation policy and preserving it as a free speech platform could be Musk’s motivations for making the offer.
2022-04-18 15:05:58