Twitter’s board is reportedly considering a “poison pill” strategy to make it more difficult for Musk to acquire a larger stake in the microblogging platform and avoid a hostile takeover, referring to Elon Musk’s $43 billion offer to buy Twitter as a “unwelcome” step.
According to The Information, Twitter’s board of directors regards Musk’s hostile takeover bid as “unwelcome” and is prepared to “fight the bid.”
A “poison pill” strategy is used by a company to deter or prevent a hostile takeover.
It gives existing shareholders the right to buy more shares at a reduced price, effectively diluting the ownership interest of a new and hostile party.
“One person close to the situation said that the board wanted to support CEO Parag Agrawal, who only assumed the role in November. Meanwhile, Musk hasn’t provided details of his plans for Twitter or his financing for the deal,” the report mentioned.
Musk is one of Twitter’s largest shareholders, owning 9.2 percent of the company.
Vanguard Group announced last week that its funds now own 10.3 percent of Twitter, making it the company’s largest shareholder.
According to The Verge, Twitter’s bylaws include “poison pill” provisions such as the board’s ability to issue “blank check” preferred stock without prior approval.
Musk said during a Ted Talk session late Thursday that if he does not acquire 100% of Twitter, he has a “Plan B” ready, but he did not provide any further details.
“I am not sure that I will actually be able to acquire it,” the billionaire added.
In his offer letter to Twitter’s board, Tesla CEO Elon Musk stated that if the company declines his offer, he will “need to reconsider (his) position as a shareholder.”
Musk has also launched a new poll with his nearly 82 million Twitter followers, with the subject line “Taking Twitter private at $54.20 should be up to shareholders, not the board”.
“Will endeavour to keep as many shareholders in privatised Twitter as allowed by law,” he posted.
Meanwhile, Agrawal has attempted to persuade employees that the micro-blogging platform would go through a “rigorous process” in response to Musk’s “unsolicited, non-binding” offer.
In an employee meeting, the Indian-origin CEO stated that the board is still evaluating Musk’s offer and will make a decision “in the best interest of our shareholders.”
