The Twitter Board unanimously approved a “poison pill plan” on Friday in an effort to prevent Elon Musk from acquiring the company.
Also known as the “anti-takeover defense” or “shareholder rights plan,” the poison pill plan is a defense tactic used by target companies to prevent hostile takeovers. In the face of a potential acquisition by Shanda in 2005, Sina adopted the “poison pill plan,” ultimately forcing Shanda to abandon the acquisition.
If any entity, individual, or group gains beneficial ownership of 15% of Twitter’s outstanding common stock without prior approval from the Board, the above shareholder rights plan will be triggered, according to Twitter. The plan is set to last for one year and will expire on April 14, 2023.
The specific method of the plan allows remaining shareholders, other than the hostile acquirer, to purchase additional stocks at a discount, making the acquisition very expensive and complicated. As of the U.S. Thursday closing price of $46.08 per share, Twitter’s stock price still fell 1.68 %, with some skepticism from the capital market about Musk’s ability to successfully acquire the company.
Previously, on April 4th, Musk publicly disclosed that he holds 9.2% of Twitter’s outstanding shares and became the biggest shareholder of Twitter. Then, on April 14th, Tesla CEO Musk proposed to acquire 100% ownership of Twitter for $54.20 per share in cash, which is equivalent to a premium 18% price for an all-cash acquisition, and values the latter company at about $43.4 billion.
Musk kept emphasizing the importance of “free speech,” and argued that in order to achieve this goal, Twitter needs to transform into a private company.
In the latest news, Musk has issued a poll on Twitter: whether the privatization of Twitter for $54.20 per share depends on the shareholders rather than the Board.The poll results showed that more than 2.8 million netizens participated in the poll, of which 83.5\% expressed their support.
In another poll about whether people want Musk to acquire Twitter, nearly 20,000 netizens voted and 73\% of them expressed their support.
However, many people think that Musk is not suitable for acquiring Twitter. For example, the CEO of Terraformation said that Musk is too old, belongs to the last generation of internet professionals, and doesn’t understand the new internet or social media operations.
In addition, Musk is also the CEO of multiple tech companies, such as Tesla, SpaceX, and The Boring Company. He was once regarded as the “leader of the cryptocurrency circle”. Regardless of whether he can successfully acquire Twitter, one must admire Musk’s time management ability.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.