Twitter has absolutely no intention of being bought by Elon Musk. The board of the social network has thus pulled a “poison pill” to curb the billionaire’s appetite for takeovers. Will that be enough?
Twitter’s board of directors wants to fight to the last to prevent Elon Musk from engulfing the social network wholeheartedly. The head of Tesla, which recently became Twitter’s largest shareholder with just over 9% of the company’s capital, initially declined a seat at the company plankas it limited the ability to acquire any number of titles.
Limit Elon Musk’s power at all costs
Then the richest man in the world shot his trump card: an unsolicited takeover bid that will cost him $41 billion. But while this acquisition generously values Twitter, whose market cap is around $36 billion, several shareholders opposed the transaction. And the board has no desire to let Elon Musk take the reins of the company.
That’s why the management of the social network pulled what’s known in financial jargon as a “poison pill” because “ the unsolicited and non-binding offer to acquire Twitter Also known as a “limited-time shareholder rights regime,” this maneuver is designed to block hostile equity participation by giving certain shareholders the right to buy more shares if an outside shareholder attempts to take control of the company.
More specifically, if Elon Musk gets 14.9% of Twitter’s equity, the other shareholders will be able to purchase shares at a discounted price. This is intended to “dilute” the billionaire’s share of the company’s capital while giving other shareholders a chance to buy more shares. And all while increasing the price of titles for Elon Musk…
This “poison pill” will make Twitter significantly more expensive for the entrepreneur. Can he afford to continue his attack? Answer in the next few days.