In the financial world, the method by which Twitter would delay Elon Musk’s acquisition plan is called a poison capsule.
What seemed like a small investment at first glance soon turned into a full takeover intent, shortly after Elon Musk became a co-owner of Twitter, the businessman announced he would buy the entire company. Based on this, it seems that Musk would not just want to propose minor changes, but would take the social platform in a radically new direction, for example by loosening content restrictions a lot for freedom of speech and making Twitter much more transparent. Apparently, the current management doesn’t want to let that happen, no matter how much the offer made by the CEO of Tesla and SpaceX would bring in some profit.
One Friday Press release Twitter has introduced a time-limited plan to change shareholder rights, often referred to as a poison capsule in the financial world. This is because the plan will allow existing shareholders to buy additional shares, possibly at a lower price than the market dictates. Specifically, Twitter will allow the purchase of shares at a fixed price for nearly a year (until April 14, 2023) if someone acquires a stake in the company of more than 15 percent without paying shareholders a so-called management premium or leaving enough time to management to evaluate the share purchase.
Such measures are taken by companies in the event of an unsolicited takeover bid from outside, so it’s no surprise that Twitter’s moves point to Elon Musk’s intentions. At first, the businessman seemed to agree not to buy more than a 14.9 percent stake in Twitter, but later withdrew that promise, similarly relinquishing his right to sit on the company’s board as the largest individual investor, followed by a takeover bid.
Twitter CEO Parag Agrawal, by the way, has previously said the management is still evaluating Musk’s offer and has not decided whether to accept it. Musk, who was previously only active as a user but now also as an investor, said in a tweet, “it would be completely defenseless if they did not initiate a shareholder vote” on his offer.
Absolutely. It would be utterly indefensible not to put this offer to a shareholder vote. They own the company, not the board of directors.— Elon Musk (@elonmusk) April 14, 2022
The businessman also wrote in a recent statement to the stock exchange that he would “rethink his investor position” on Twitter if his takeover bid were rejected. In addition to the shareholder plan that makes the acquisition a less good business, Twenty is working on another solution. Fortune and they are trying to find another investor who would buy the company at the same price or higher than Musk’s offer, but would not interfere so drastically in its operation.
Source: PC World Online Hírek by pcworld.hu.
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