Twitter defends ‘poison bullet’ in Musk takeover bid

Twitter defends 'poison bullet' in Musk takeover bid

by Matt O’Brien

PROVIDENCE, RI (AP) — Twitter said Friday that its board of directors unanimously adopted a “poison pill” defense in response to Tesla CEO Elon Musk’s proposal to buy the company and take it private.

Twitter said the move, formally called a “limited-term shareholder rights scheme,” aims to enable its investors to “realize the full value of their investments,” by reducing the likelihood that any The individual can gain control of the company without paying the shareholders. Premium or giving more time to the board. Poison pills are often used to defend against a hostile takeover.

Twitter’s plan will take effect if Musk’s roughly 9% stake rises to 15% or more. Even so, Musk could still take over the company with a proxy fight by voting out the current directors. Twitter said the plan does not prevent the board from engaging with the parties or accepting a takeover offer if it is in the “best interest” of the company.

Twitter disclosed in a security filing on Thursday that Musk offered to buy the company for more than $43 billion, saying the social media platform should be viewed “as a private company” to build trust with its users. needs to be changed”.

“I believe that free speech is a social imperative for a functioning democracy,” Musk said in the filing. “Now I realize that the company will neither thrive nor meet this social imperative in its present form.”

Later on Thursday, during an onstage interview at the TED 2022 conference, he went on to elaborate: “Having a public forum that is more credible and broadly inclusive is extremely important to the future of civilization. “

Musk disclosed in regulatory filings in recent weeks that he had been buying Twitter shares in almost daily batches since January 31, ending up with a stake of about 9%. Only the Vanguard Group controls most of the Twitter shares. A lawsuit filed Tuesday in federal court in New York alleged that Musk illegally delayed the disclosure of his stake in the social media company so that he could buy more shares at lower prices.

After Musk announced his stake, Twitter immediately offered him a seat on its board on the condition that he would limit his purchase to no more than 14.9% of the company’s outstanding stock. But the company said five days later that Musk had refused.

A poison bullet path is a “predictable” defensive maneuver, although it can be viewed as a “sign of weakness” and viewed adversely on Wall Street, Wedbush Securities analyst Daniel Ives said in an email note. .

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