BENGALURU: Twitter Inc. on Friday set up a plan to protect itself from billionaire entrepreneur Elon Musk’s $43 billion cash takeover offer.
Tesla CEO Elon Musk sent a letter to the board of Twitter on Wednesday. It was made public in a regulatory filing on Thursday.
After giving a talk at TED on Thursday, Musk said that he might make a hostile bid for Twitter. He would bypass Twitter’s board and put the offer directly to its shareholders. Under the plan, known as a “poison pill” strategy to fight off a bid from a potential buyer, the rights will become exercisable if anyone buys 15% or more of Twitter’s stock in a deal that the Board doesn’t like.
In 2023, Twitter says the rights plan will be over, and it will no longer work.
Analysts and activist shareholders say that when the social media company’s management fights a set of proxy proposals at its upcoming annual meeting, Musk could have a big impact on the company’s future. The proposals cover everything from civil rights to politics.
Musk’s bid to buy Twitter outright was announced on Thursday, and investors with different political views say that the billionaire entrepreneur is likely to try to remove some of the restrictions that Twitter has put on content in order to promote free speech and fight hate speech and false information.
Tesla CEO Elon Musk recently revealed that he has a 9.6% stake in the company. Even if he doesn’t buy Twitter, he is seen as likely to vote in a way that could change the company at its virtual May 25 meeting, say people who follow corporate governance.
According to Brian Bueno, a corporate governance and executive pay consulting firm, “I don’t see him voting with management very often because he wants to be a disrupter and because he doesn’t like the way things are going.”
Musk said that his offer price of $54.20 per share was meant to encourage people to talk freely. At the virtual meeting, he will have the second-largest stake after Vanguard Group, which will give him or her a role as a kingmaker in close races.
Musk didn’t answer questions right away about how he might vote at Twitter.
Probably, a lot of people will be paying attention to the event because of the star power of Musk. Charles Elson, who founded the Weinberg Center for Corporate Governance at the University of Delaware, thinks that way. In the middle of all this, “he’s a well-known person,” said Elson. People will be more interested in voting because of this, and it could have a big effect.
Even though Twitter on Friday adopted a shareholder rights plan to protect itself from Tesla CEO Elon said that the plan might only make proxy advisers, who don’t like so-called “poison pills,” more suspicious of the company.
Twitter is facing five shareholder proposals, all of which management opposes. They all deal with topics that are getting a lot of attention from investors.
Two are from conservative groups. One wants Twitter to report on how it affects civil rights, and the other wants it to report on how it helps lobby. Musk’s offer was “great” for shareholders, says Scott Shepard, a fellow at the right-leaning National Center for Public Policy Research think tank, which is one of the sponsors of the event.