On Friday, a Twitter team showed that it would not go quiet after Musk offered to buy the company.
Twitter is trying to thwart billionaire Elon Musk’s acquisition attempt with a “poison pill”, a financial tool that companies have been using against unscrupulous lawyers for decades.
On Thursday, a few days after the Tesla CEO said he was no longer going to join the board of directors of the social media company, Musk offered to buy Twitter.
He paid $ 54.2 per share for Twitter, calling the price his best and ultimate offer.
On Friday, Twitter’s board showed that it would not go quietly, with the acquisition of more than 15 per cent of the shares without the company’s approval triggering a plan to fill the market with stocks, making it more difficult to buy.
What to do with poison pills?
The ingredients of each poison pill are different, but they are all designed to give corporate boards an option to fill the newly created stock market.
This strategy was popularized in the 1980s when companies were publicly run by corporate raiders such as Carl Icon – now often referred to as “operational investors”.
Twitter did not release details of its poison pill on Friday, but said it would provide more information on an upcoming filing with the Securities and Exchange Commission, which delayed the public markets closing on Friday.
Musk currently owns about 9 percent of the stock.
Can a Poison Pill Be a Negotiation Trick?
While they should help prevent unsolicited acquisitions, poison pills open the door to further negotiations that may force the auctioneer to sweeten the deal.
If the high price makes sense for the board, a poison pill can be set aside along with the severity it provokes and clarify the way to end the sale.
True to form, Twitter has opened its door by insisting that its poison pill does not prevent its board from “engaging with parties or accepting a high-priced acquisition plan”.
Accepting a poison pill often results in lawsuits alleging that a corporate board and board of directors are using tactics to retain their work against the best interests of the partners.
How did Musk respond to Twitter’s announcement?
Musk, who has 82 million followers on Twitter, had no immediate reaction to the company’s poison pill.
But on Thursday he said he was ready to take legal action.
“If the current Twitter board takes action that is contrary to the interests of the shareholders, they will violate their trusted obligation,” Musk tweeted. “That way the responsibility they feel will be on the Titanic level.”
Musk has publicly said his $ 43bn bid was the best and final offer for Twitter, but other company leaders have made similar statements before finally making the cut.
With an estimated $ 265bn property value, Musk seems to have pockets deep enough to elevate his offer, though he is still thinking about how to finance the proposed purchase.
Musk also questioned Saudi Arabia’s role in Twitter Inc after Prince Alwaleed bin Talal of the Kingdom tweeted his opposition to the billionaire entrepreneur’s offer to buy the social media company.
The prince tweeted on Thursday that Musk’s offer was not close to Twitter’s “inherent value”.
“As one of Twitter’s largest and longest-term partners, ingKingdom_KHC & I turn down this offer,” Prince told Kingdom Holdings, a Saudi-based company he owns.
Responding to the tweet, Musk asked how much Twitter, directly and indirectly, belongs to Saudi Arabia.
“What are the state’s views on press freedom?” Kasturi added.
“Lifelong social media lover. Falls down a lot. Creator. Devoted food aficionado. Explorer. Typical troublemaker.”