Twitter opposes the acquisition of Elon Musk

San Francisco Twitter’s board of directors decided to take defensive action against the company’s purchase at a special meeting on Friday. The company announced that the new rules had been approved unanimously.

The Board of Directors has approved what is known as a “poison pill”. This is a measure that companies often take to avoid a hostile takeover.

The poison pill kicks in when an individual or group acquires at least 15 percent of Twitter’s outstanding common stock without board approval. The other shareholders then have the opportunity to purchase additional shares at a discount. That would make an acquisition difficult. The rule should apply for one year.

The day before, Elon Musk had announced that he wanted to buy 100 percent of Twitter’s shares for around $43 billion and then take the company private. Musk has already bought a 9.2 percent stake in recent weeks. Investors in the stock market don’t think Musk will hit his target: In New York trading, the share price fell about 1.7 percent to the $45 mark by midday. However, the poison pill does not mean that the board of directors has finally rejected the takeover bid.

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The board explicitly reserved the right to continue to approve a sale of the company “if the board of directors believes this is in the best interest of Twitter and its shareholders,” the Twitter statement said.

Elon Musk wants to buy Twitter

San Francisco-based founder Mostafa Akbari-Hochberg said Musk offered less than $54.2 a share. “The offer is undervalued by $10 a share,” Holobuilder’s CEO said. “At $65 a share or more, the sentiment would be very different,” he surmised. High Mount of Akbari.

A prominent Twitter investor also called Musk’s offer too low. Saudi Arabia’s Prince Alwaleed bin Talal said the offer was not even close to the value of the social media platform.

>> Read also: Elon Musk’s $1 Billion Twitter Offer Is Met With Skepticism From Investors

At a conference on Thursday, Musk said he wasn’t sure “I can really afford it.” He added that his intention is to “retain as many shareholders as the law allows” rather than remain the sole owner of the company.

“If the deal doesn’t go through because I don’t trust management or I don’t think they can drive the necessary change in the public market, I would have to reconsider my position as a shareholder,” Musk said.

Musk is by far the richest person in the world. His wealth is estimated at 251,000 million dollars (232,000 million euros) according to the financial service Bloomberg, based on the latest share prices. The wealth is mainly made up of holdings in electric carmaker Tesla and space company SpaceX. To buy Twitter, you would have to sell shares or take out loans with the shares as collateral.

Twitter’s weak coverage against acquisitions

But even if Musk can raise the necessary funds, shareholder approval is the big hurdle. In addition to the free float, Twitter has several financial investors as major shareholders, each holding between two and eight percent of the shares. Therefore, it would not be enough to convince only a few major shareholders to sell.

At the same time, Twitter is not as well protected against hostile takeovers as, for example, Facebook, Amazon or Google, where the founders received shares with more voting rights. This allows them to retain control of the company even if they no longer hold a majority of the shares. Musk criticized this: in the target group, for example, this ensures that “Mark Zuckerberg on the 14th” still retains control over Facebook, WhatsApp and Instagram.

As a reason for his interest in Twitter, Musk says he wants to strengthen freedom of expression on the platform. That’s only possible if the short-messaging service exits the stock market, he argues. Musk outlined his idea of ​​free speech as follows: “If someone you don’t like can say something you don’t like.” Within the limits of the law, all opinions should be allowed.

This attitude drew criticism from experts such as Facebook’s former head of security, Alex Stamos. He doesn’t add value to a platform by filling it 99.9 percent with porn and ads for fake-brand sunglasses and erectile dysfunction drugs.

>> Read also: Twitter CEO is the hardest job in Silicon Valley

In recent years, it has been mainly conservatives in the United States, and especially supporters of former President Donald Trump, who have accused Twitter and other online platforms like Facebook of “censorship.”

Most of these were about measures against the spread of false information about the corona virus and Trump’s false claims that his victory in the 2020 presidential election was stolen.

With agency material

Plus: Four scenarios for Elon Musk’s takeover of Twitter.

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