Twitter’s board has unanimously adopted a so-called shareholder rights plan, also known as a “poison pill,” as the struggle for control of the social media platform intensified.
“The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium,” Twitter said in a statement.
Musk sent shockwaves through the tech world on Thursday with an unsolicited bid to buy the company, stating the promotion of freedom of speech on Twitter as a key reason for what he called his “best and final offer.”
The world’s richest person offered $54.20 a share, which values the social media firm at some $43 billion, in a filing with the Securities and Exchange Commission made public on Thursday.
Musk told a conference in Canada that he was “not sure” he would succeed and acknowledged a “plan B” but refused to elaborate, though in the filing he noted a rejection would make him consider selling his shares.
Musk last week disclosed purchase of 73.5 million shares — or 9.2% — of Twitter’s common stock, an announcement that sent its shares soaring more than 25%.
The board’s “rights plan” kicks in if a buyer takes 15% or more of Twitter’s outstanding common stock in a transaction not approved by the board.
Musk said he “could technically afford” the buyout while offering no information on financing, though he would likely need to borrow money or part with some of his mountain of Tesla or SpaceX shares.
Despite saying he wanted to take the company private, he said the firm would keep up to 2,000 investors — the maximum allowed.
Some investors have already spoken against the proposal, including businessman and Saudi Prince Alwaleed bin Talal.
Morningstar Research analysts echoed that perspective, saying, “While the board will take the Tesla CEO’s offer into consideration, we believe the probability of Twitter accepting it is likely below 50%.”
Twitter stock closed down nearly two percent Thursday.
Musk’s move throws another curve into the roller-coaster ride of his volatile relationship with the global social media service, and raises many questions about what comes next.
He was offered a seat on the board but turned it down over the weekend.
Musk breaks the mold as a business figure, even in the Silicon Valley world known for disrupting markets and changing lifestyles.
The serial entrepreneur’s endeavors include driving a shift to electric vehicles with Tesla, private space exploration and linking computers with brains.