Shares of Twitter Inc. acquired Monday after a communications company launched a self-defense pill to prevent Elon Musk's unsolicited bid to take the company privately to $ 54.20 a share.
The security installation on Monday confirmed the Twitter protection strategy unveiled last week, which will allow the company to issue new stock all shareholders except Musk can buy at a discounted price. It imposes a "maximum fine" on any person or company that can acquire more than 15% of a company without the board's approval, according to the application. Musk currently owns more than 9% of Twitter shares.
"The Board has adopted a rights agreement to protect shareholders from fraudulent or improper take-off strategies," according to the file.
Stocks rose 3.8% to $ 46.78 at 1:00 p.m. in New York.
Twitter uses the toxic pill protection to buy time to come up with a plan that will benefit its shareholders, according to someone familiar with the company. Shares are growing amid speculation that Twitter will have a very exciting deal for shareholders.
The company has been seeking to benefit from other organizations, including technology-based independent company Bra Bravo LLC, according to a source familiar with the matter. The independent equity firm Silver Lake, which already has a significant share of Twitter, could also make sense as a partner as it has an existing relationship with Musk as well, but it is unclear if they are interested. At that point Musk may be partnering with Oracle Corp. and a similar non-profit organization including Thomas Bravo to block the Twitter poison pill, according to Intelligence analysts, "while increasing the bid by 10-15% to $ 50 billion."
Musk, on the other hand, said that any refusal to grant his request, costing Twitter $ 43 billion, would prompt him to re-evaluate his stake. Over the weekend, Musk said the economic interests of the Twitter board were not in line with shareholders. He was responding to a tweet about the seizure of shares of board members, saying that with the departure of his co-founder Jack Dorsey, the board "has come together with almost no shares." Writing on Twitter on Monday, Musk, who is also CEO of Tesla Inc., said that if his Twitter application was successful, board members would not be paid.
Tesla has paid its directors an annual savings of $ 20,000 plus additional payments in recent years, but each of them also receives stock options benefits every few years - meaning they will earn tens of millions of dollars or more in Tesla's stock price. benefits.
Since making the request last week, Musk has been actively posting on his Twitter account in what appears to be a social media campaign to remove public opinion in favor of his request.
The billionaire businessman has circulated a secret tweet with the word “tender,” which is a reference to blinking and shaking his head at a possible tender agreement.
If Musk is serious about advancing his proposal to take up Twitter, he should submit a tender promise to acquire shares in a company he does not own despite the poison pill, said Andrew Freedman, chairman of the shareholders' rights group. at the law firm Olshan Frome Wolosky.
"While Musk will not be able to keep his promise of the tender, even for many stocks that have been bought, given a poison pill and other obstacles, it is a move to 'put your money where your mouth is' and it shows that you really want to buy this company," Freedman said.
Musk is likely to launch a proxy competition simultaneously to ask shareholders to abstain from voting for two directors who will run for re-election at this year's annual general meeting, scheduled for May 25, Freedman said. That would serve as a referendum on his application, and also allow him to solicit votes to amend the company constitution so that it would not be on the board, meaning all directors would run in elections every year rather than a few, he added. Last year, the same proposal almost reached the 80% vote needed to change the company's by-laws, he noted.
If Musk does not do so in the next few months, he will not be able to do much on Twitter until next year's annual general meeting because the company does not allow shareholders to call a special meeting or do so with written consent. Freedman noted that both Twitter's Chief Executive Officer Parag Agrawal and Chairman Bret Taylor would run for re-election next year. Dorsey is scheduled to leave the board when his term expires at the next shareholders' meeting.
If Musk “gets widespread support this year, it may force the company to negotiate with Musk before what we would like to do or announce and run the sales process. All to avoid dealing with music next year, ”he said.
