Twitter, which is the subject of an unsolicited takeover bid by Elon Musk, on Friday announced measures to defend itself from the offensive, which is supposed to prevent the Tesla boss and the world’s richest man. easily redeem their shares.
This is the so-called “poison pill” clause in financial jargon: the Californian group plans to sell off its shares for all other shareholders.
It will be triggered if Elon Musk exceeds 15% of Twitter shares without the agreement of the board of directors (CA). Elon Musk owns just over 9% of the company’s capital at this stage.
If he buys back enough shares to reach the 15%, all the other holders of shares on the platform will be able to buy them back at a reduced price, which would greatly increase the price that the entrepreneur would have to pay to get his hands on the social network.
The plan must “reduce the possibility that any entity, person or group will take control of Twitter by accumulating securities in the market without paying all shareholders an appropriate premium or without giving the board sufficient time to make informed decisions,” the San Francisco-based company said in a statement.
Twitter therefore intends to fight against this attempt by Elon Musk to buy it back to make it an unlisted company.
“It’s a defensive tactic that was predictable,” said analyst Dan Ives of Wedbush. But it will not be perceived “positively” by shareholders, he predicts, given the risk of “dilution”.
And the plan will “certainly be challenged in court” because the board has an obligation to act in the interests of the company and increase its value for shareholders.
Elon Musk on Wednesday presented a proposal to acquire the social network at a price that would value it at 43.4 billion dollars, against about 36 billion at present.
He said Thursday he had “sufficient funds”, assured that he had a plan B if the Board refused his offer, and also that he was not looking to “make money”, during a live interview at the Ted2022 conference.
He didn’t give specifics on the financing, but he would definitely have to borrow or divest some of his shares in Tesla or SpaceX, his spaceflight company.
Very active on Twitter where he has nearly 82 million subscribers, but also very critical of the network’s content moderation policy, he claims to want to make it “the platform for freedom of expression in the world”, with less limits on what users can tweet.
After repurchasing 73.5 million common shares of the company early last week, he was offered a seat on the board but ultimately turned it down on Sunday, after a series of suggestions to change the platform, such as the addition of an “edit” button or the removal of advertisements, Twitter’s main source of income.
A follower of polemics, provocations and dubious jokes, he also chained derogatory tweets, wondering if the tweeting network was “dying” because certain very popular accounts post little.
“I think it’s going to be quite painful and I’m not sure I’ll be able to buy it,” admitted the whimsical entrepreneur on Thursday, before explaining that he hoped to rally as many existing shareholders as possible to his project. .
One of them has already reacted: Saudi prince and investor Al-Walid bin Talal said on Twitter that he “rejected” an offer that was too low compared to the “intrinsic value of Twitter”.
But the influence and pressure exerted by Mr. Musk does not leave Twitter executives with many options, commented analysts at Wedbush Securities.
“We believe this twisty soap opera will end with Mr. Musk acquiring Twitter after this hostile takeover,” he predicted in a note Thursday.
“The board doesn’t want Musk because they disagree on just about everything and his style is not compatible with their corporate culture,” Dan Ives said in an analysis published in the Daily Mail on Thursday.
But the board won’t have many options, he said, because “Musk is as committed to running Twitter as SpaceX or Tesla.”