PROVIDENCE, R.I. (AP) \u2014 Twitter said Friday that its board of directors has unanimously\u00a0adopted a \u201cpoison pill\u201d defense\u00a0in response to Tesla CEO Elon Musk\u2019s\u00a0proposal to buy the company\u00a0for more than $43 billion and take it private.<\/p>\n\n\n\n
The move would allow existing Twitter shareholders \u2014 except for Musk \u2014 to buy additional shares at a discount, thereby diluting Musk\u2019s stake in the company and making it harder for him to corral a majority of shareholder votes in favor of the acquisition.<\/p>\n\n\n\n
Twitter\u2019s plan would take effect if Musk\u2019s roughly 9% stake grows to 15% or more.<\/p>\n\n\n\n
The poison pill injects another twist into\u00a0a melodrama\u00a0surrounding the possibility of the world\u2019s richest person taking over a social media platform he described Thursday as the world\u2019s \u201cde facto town square.\u201d<\/p>\n\n\n\n
Twitter said its plan would reduce the likelihood that any one person can gain control of the company without either paying shareholders a premium or giving the board more time to evaluate an offer. Such defenses, formally called shareholder rights plans, are used to prevent the hostile takeover of a corporation by making any acquisition prohibitively expensive for the bidder.<\/p>\n\n\n\n
Even if it discourages his takeover attempt, Musk could still take over the company by waging a \u201cproxy fight\u201d in which shareholders vote to retain or dismiss the company\u2019s current directors. Twitter said its plan doesn\u2019t prevent the board from negotiating or accepting an acquisition proposal if it\u2019s in the company\u2019s best interests.<\/p>\n\n\n\n
\u201cThey\u2019re gearing up for a battle here with Musk,\u201d said Daniel Ives, an analyst for Wedbush Securities. \u201cThey also have to give themselves time to try to find another potential buyer.\u201d<\/p>\n\n\n\n
Musk has offered to buy the company outright for more than $43 billion, saying it \u201cneeds to be transformed as a private company\u201d in order to build trust with its users and do better at serving what he calls the \u201csocietal imperative\u201d of free speech.<\/p>\n\n\n\n
\u201cHaving a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,\u201d he said during an onstage interview at a TED event Thursday, just hours after his bid was announced.<\/p>\n\n\n\n
With about 82 million Twitter followers, Musk is both a prolific user of the platform and a vocal critic of the measures it has taken to restrict accounts that spread misinformation or amplify violent rhetoric and hate speech. He said Thursday he\u2019s opposed to permanent user bans \u2014 the most famous of which is Twitter\u2019s suspension of former President Donald Trump\u2019s account after the Jan. 6 Capitol riot.<\/p>\n\n\n\n
Musk revealed in recent regulatory filings that he\u2019d been buying Twitter shares in almost daily batches starting Jan. 31, ending up with a stake of about 9%. Only Vanguard Group controls more Twitter shares. A\u00a0lawsuit filed Tuesday in New York\u00a0federal court alleged that Musk illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.<\/p>\n\n\n\n
After Musk announced his stake, Twitter quickly offered him a seat on its board on the condition that he would limit his purchases to no more than 14.9% of the company\u2019s outstanding stock. But the company said five days later that Musk had declined.<\/p>\n\n\n\n
Ives said Twitter\u2019s poison pill path is a predictable defensive maneuver but could be seen as a \u201csign of weakness\u201d for the company on Wall Street.<\/p>\n\n\n\n
Musk could try to fight the measure in court, but \u201cno court has overturned a poison pill in the last 30 years,\u201d said Columbia University law professor John Coffee. Rallying shareholders to kick out the board might be more doable but also presents challenges to Musk, Coffee said.<\/p>\n\n\n\n
Musk\u2019s offer already faced resistance before Twitter threw its Friday counterpunch.<\/p>\n\n\n\n
A Saudi prince who is among Twitter\u2019s major shareholders scoffed at Musk\u2019s offer in a\u00a0Thursday tweet. Al Waleed bin Talal said he would reject Musk\u2019s overtures because he didn\u2019t believe $43 billion \u201ccomes close to the intrinsic value of Twitter, given its growth prospects.\u201d The prince punctuated the tweet with another one from 2015 disclosing his Kingdom Company had raised its stake in Twitter to 5.2% — about half of what Musk now holds.<\/p>\n\n\n\n
While Musk\u2019s $54.20-per-share offer is nearly 40% greater than Twitter\u2019s stock price before he disclosed his huge investment, it\u2019s still far below the peak closing price of $77.63 reached less than 14 months ago. At that time, Twitter was valued at about $62 billion.<\/p>\n\n\n\n
Musk responded to the prince with a tweet asking how many Twitter shares he holds and then made what may have been a veiled reference to the 2018 murder of journalist Jamal Khashoggi that was tied to Saudi Arabia\u2019s Crown Prince Mohammed bin Salman. \u201cWhat are the Kingdom\u2019s views on journalistic freedom of speech?\u201d Musk asked in a\u00a0Thursday tweet.<\/p>\n\n\n\n
In a sign that investors are skeptical about Musk\u2019s offer, Twitter\u2019s stock fell in the first day of trading after the takeover bid was announced Thursday — exactly the opposite of what an approving market reaction looks like. The stock markets were closed Friday for the Good Friday holiday. Twitter said it plans to disclose more details of its shareholder plan in an upcoming regulatory filing.<\/p>\n\n\n\n
Another outspoken billionaire, Dallas Mavericks owner and tech investor Mark Cuban, weighed in on Twitter to share his theory that Musk is making his bid to goose the company\u2019s stock price so he can sell his stake at a profit. Using a profane term, Cuban also postulated Musk is using the bid to torment the U.S. Securities and Exchange Commission, the stock market regulatory agency that fined Musk $20 million in 2018 after he tweeted about a potential buyout of Tesla that never materialized.<\/p>\n\n\n\n
In Thursday\u2019s TED event, Musk made it clear he is still incensed with the SEC and cursed the regulators with a profanity.<\/p>\n","protected":false},"excerpt":{"rendered":"
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