Twitter adopts poison pill defensive strategy to fend off Elon Musk Takeover. It allows to buy additional shares at a reduced price, effectively diminishing the hostile party’s ownership stake. Poison pills are frequently used by corporations facing activist investors or hostile takeover situations.
Twitter Inc. has taken efforts to protect itself from hostile takeover offers, thwarting billionaire Elon Musk’s unwelcome offer to take the business private and turn it into a stronghold of free expression.
The board established a one-year shareholder rights plan. The plan can be used if a party acquires 15% of the stock without prior consent. According to a statement released on Friday, the proposal aims to ensure that anyone gaining control of Twitter through open market accumulation pays an adequate control premium to all shareholders.
According to a source familiar with the situation, Twitter implemented the plan to buy time. The board wants to evaluate and negotiate any proposal before accepting it.
Twitter offers musk board member seat
5 April 2022: Musk is offered a position on Twitter’s board of directors shortly after his 9 percent ownership in the firm is publicised. On April 5, Twitter CEO Parag Agrawal tweets Musk’s appointment to the board of directors.
Musk was offered a board seat on the condition- If he would not buy more than 14.9 percent of Twitter’s remaining stock. Musk initially accepted the offer, stating that he was looking forward to “significantly improving Twitter” alongside the team.
I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board.
— Parag Agrawal (@paraga) April 5, 2022
Musk declines board seat offer
April 9, 2022: Musk declines a board seat offer from Twitter on April 9, 2022. According to Twitter’s CEO, he was meant to officially join the board that day, but instead elected not to join that morning.
The next day, April 10, 2022, Agrawal tweets that Musk has declined to join Twitter’s board of directors. It was initially unclear why Musk declined to join, but it appears that his larger plans were still in the works.
April 12, 2022: Marc Bain Rasella, a Twitter investor, filed a lawsuit against Musk in federal court in New York. The following are some of the claims made in the lawsuit:
That Musk may have failed to report his Twitter stock purchases to the Securities and Exchange Commission (SEC) on time (within 10 days). As a result, investors who sold their shares before Musk’s purchase became public on April 4 may have missed out on gains they could have received when Musk’s purchase became public.
Musk is reportedly said to have saved $143 million by delaying the disclosure of his stock transaction, allowing him to buy Twitter stock at a lower price.
Elon has decided not to join our board. I sent a brief note to the company, sharing with you all here. pic.twitter.com/lfrXACavvk
— Parag Agrawal (@paraga) April 11, 2022
Musk offers to buy Twitter for $43 billion
April 14, 2022: Musk announced on Twitter that he has made a bid to purchase Twitter. Musk wants to buy the company for $43 billion and take it private. He wants to buy Twitter for $54.20 per share, which he describes as his “best and final offer.”
If the offer isn’t accepted, Musk stated in a letter included with the SEC filing for the bid to buy Twitter, “I would need to reassess my status as a shareholder.”
As Musk makes a bid to buy Twitter, the stock drops.
14 April 2022: Twitter’s stock dropped shortly after Musk’s buyout attempt was announced.
According to MarketWatch, the stock dropped 1.7 percent to $45.08, which is lower than Musk’s bid price per share.
I made an offer https://t.co/VvreuPMeLu
— Elon Musk (@elonmusk) April 14, 2022
Twitter Adopts Poison Pill Strategy To fend Off Musk Takeover
April 15, 2022: On April 15, Twitter’s board of directors stated that it will use a “poison pill” deterrent against Musk’s acquisition offer. When the poison pill use?
The poison pill use when current shareholders of a firm are allowed to buy more shares at a reduced price in order to undermine the ownership interest of the individual attempting to take over the company (Musk).
According to Investopedia, there are various types of poison pill techniques, and the one we just discussed (where you let all present shareholders to buy reduced shares except the investor attempting to take over) is called a “flip-in poison pill.” The takeover becomes progressively cost-prohibitive for the investor who wants to take over as a result of this tactic.
If Musk’s stake in Twitter rises to 15% or above. Twitter will activate poison pill to stop musk.
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