Elon Musk has been fighting the good fight to keep speech on Twitter free and, predictably, the elitists that control Twitter are furious at the idea that someone who actually respects free speech could possibly own the social media platform.
So, as has been widely expected since Elon sent his letter announcing that he wanted to take Twitter private, the scheming members of the board came up with a “poison pill” plan to keep Elon’s hostile takeover from going into effect.
News on that comes from Bloomberg, which reported that “The board set up a shareholder rights plan, exercisable if a party acquires 15% of the stock without prior approval, lasting for one year only. The plan seeks to ensure that anyone taking control of Twitter through open market accumulation pays all shareholders an appropriate control premium, according to a statement Friday.”
However, while the plan might potentially prove effective in stopping Elon for now, it’s only a stopgap measure, again according to Bloomberg:
Twitter enacted the plan to buy time, according to a person familiar with the matter. The board wants to be able to analyze and negotiate any deal, and may still accept it.
In fact, while the poison pill measure might stop Elon from buying up stock without approval, the Board of Directors is still theoretically open to a takeover, as the letter itself said, saying:
“The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders.”
Whether or not Elon’s buyout offer rises to the level of being an acquisition proposal that is “in the best interests of Twitter and its shareholders” is unclear.
However, commenters have noted that Elon is offering a hefty premium that certainly seems to be in the interest of Twitter’s shareholders, particularly because if Elon decides to dump his shares and pull out he could tank the company’s stock by selling off his 9% stake in the social media giant.
Perhaps that could be ameliorated by the poison pill strategy letting current shareholders buy more shares at a discount, something that would dilute Elon’s ability to buy up more of the company or tank its stock in a sell-off, though such a strategy could be fraught with the risk of infuriating shareholders that just want Twitter to accept Elon’s offer and accept the premium.
Particularly, that frustration could come to the fore if Elon does sell off his shares and cause a stock price plummet, something that could lead to investors suing the board for breaching its fiduciary duty.
So, while the Board has stopped him, for now, from just buying up all the stock on the open market, it hasn’t really dealt with the issue of Elon’s offer to buy the company at a premium, particularly because the ostensible goal of the strategy is to stop the company for being bought at current value rather than at a premium.
Now it’s Elon’s turn to respond, so we’ll see what he does next. If his recent tweets are any guide, he’s not in the mood to be messing around with the board, so fireworks might be on the horizon.