A security filing on Monday confirmed the defense strategy Twitter outlined last week, which would allow the company to issue new stock that all shareholders except Musk can buy at a discounted price. According to the filing, it imposes a “significant penalty” on any person or entity that would acquire more than 15% of the company without board approval. Musk currently owns more than 9% of Twitter’s shares.
According to the filing, “the board adopted the rights agreement to protect shareholders from coercive or otherwise unfair takeover tactics.”
The stock rose 3.8% to $46.78 at 1:00 p.m. in New York.
According to a person familiar with the company, Twitter is using the poison pill defense to buy time to come up with a plan in the best interest of its shareholders. Shares are rising amid speculation that Twitter will strike a deal that will be more favorable to shareholders.
According to a person familiar with the matter, the company is fielding acquisition interest from other parties, including technology-focused private equity firm Thoma Bravo LLC. Private equity firm Silver Lake, which already owns a significant stake in Twitter, also makes sense as a partner because it also has an existing relationship with Musk, but it’s not clear if they’re interested. . Meanwhile, Musk could partner with Oracle Corp. and a private equity consortium that includes Thoma Bravo to thwart Twitter’s poison bullet, according to analysts at Bloomberg Intelligence, “increasing the bid by 10-15% to nearly $50.” Billion.”
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Musk, for his part, has said that Twitter’s rejection of his $43 billion bid would require him to re-evaluate his stake. Over the weekend, Musk said the economic interests of Twitter’s board do not align with those of shareholders. He was responding to a tweet about board members’ stock holdings, saying that with the imminent departure of co-founder Jack Dorsey, the board “collectively holds almost no shares.” In a tweet on Monday, Musk, who is also the chief executive officer of Tesla Inc., said that if his Twitter bid is successful, the board members will not be paid salaries.
Tesla pays its own directors an annual cash retainer of about $20,000 and some additional fees in recent years, but they also receive stock option grants every few years—meaning they pay off Tesla’s stock price. stand to make tens of millions of dollars or more. Benefit.
Since proposing last week, Musk has been actively posting on his Twitter account what appears to be a social media campaign to sway public opinion in favor of his bid.
The billionaire entrepreneur just released a cryptic tweet with the word “tender,” a likely blink-and-miss reference to a potential tender offer.
If Musk is serious about pursuing his takeover offer for Twitter, said Andrew Friedman, co-president of the shareholder activism exercise, he should launch a tender offer to acquire shares in the company, which has already been poisoned. Despite the bullet, he does not have it. In the law firm Olshan From Volosky.
“Although Musk won’t be able to turn down his tender offer, even with the majority of shares tendered, given the poison pill and other hurdles, it’s a ‘get your money where your mouth is’ type of trick.” and shows that he really wants to buy this company,” Friedman said.
Friedman said Musk could simultaneously launch a proxy contest where he would ask shareholders to withdraw their votes for the two directors who would stand for re-election at this year’s annual meeting, which takes place on May 25. is going to happen. He said this would serve as a referendum on his proposal, and would also allow him to seek votes to amend the company’s charter to declassify the board, meaning that all directors stand for election every year. Would be, not something. Last year, a similar proposal nearly achieved the 80% vote limit needed to change the company’s bylaws, he said.
If Musk doesn’t take action in the next few months, he won’t be able to do much on Twitter until next year’s annual general meeting because the company doesn’t allow shareholders to call special meetings or act with written consent. Friedman noted that Twitter CEO Parag Agarwal and chairman Brett Taylor will both run for re-election next year. Dorsey is due to leave the board after his term ends at the next shareholder meeting.
If Musk can “get fairly broad support this year, it could force the company to arm the company in talks with Musk before they want to announce or announce the sales process and run. Music next year.” All to avoid facing that,” he said.
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