Twitter board adopts ‘poison pill’ after Musk’s $43 billion bid to buy company

Twitter approved a limited-term shareholder rights plan, often called a “poison pill,” a day after billionaire Elon Musk offered to buy the company for $43 billion, the company announced Friday.

The council unanimously approved the plan.

Under the new structure, if an individual or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without board approval, other shareholders may purchase additional shares at a discount.

The plan will expire on April 14, 2023.

Such a move is a common way to fend off a potential hostile takeover by diluting the interest of the entity targeting the takeover.

“The Rights Plan will reduce the likelihood that an entity, person or group will gain control of Twitter through accumulation of the open market without paying all shareholders an appropriate control premium or without giving the Board of Directors sufficient time to make informed decisions and take actions. doing what’s best.” interests of shareholders,” the company said in a press release.

Twitter noted that the rights plan would not prevent the board from accepting a takeover offer if the board deems it in the best interest of the company and its shareholders.

Musk already owns more than 9% of Twitter, according to a filing from the Securities and Exchange Commission last week. Shortly after his share went public, the Twitter CEO announced plans for Musk to join the board. But days later, Musk reversed course and decided not to step on the board after all.

Had he joined, Musk would not be allowed to accrue more than 14.9% of beneficial ownership of the company’s outstanding common stock.

Also on Friday, citing anonymous sources, Bloomberg reported that Twitter had engaged JPMorgan to help respond to Musk’s offer. Twitter has already partnered with Goldman Sachs and Musk has partnered with Morgan Stanley.

Several outlets, including The New York Post, reported that Twitter also sparked interest from Thoma Bravo, though it’s still uncertain whether a bid will materialize, according to sources who spoke to Reuters.

JPMorgan has history with Musk and is suing Tesla over a case related to his 2018 tweet claiming he had “secured funding” to sell the company. Tesla later sued the bank.

JPMorgan, Twitter and Thoma Bravo declined to comment.

In a live-streamed interview at the TED2022 conference in Vancouver on Thursday, Musk presented his vision for making Twitter’s algorithms more publicly accessible and limiting content moderation.

He also acknowledged that he is “not sure” if he can actually buy Twitter, although he said he has “sufficient funds” to fund the deal if accepted. Despite his fortune, Musk has much of his wealth tied up in the equity of his companies, including Tesla, meaning he will likely have to liquidate or borrow against his ability to come up with a large sum.

But Musk said “there’s” a plan B if his first offer to buy the company and take it private, which he called his “best and last,” is turned down. He declined to provide further details in the TED interview.

On Friday, former Twitter CEO and current board member Jack Dorsey tweeted that “the real problem” is that “as a publicly traded company, Twitter has always been ‘for sale.’”

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