How Twitter is trying to counter Elon Musk’s offensive

Twitter, which is the subject of a hostile takeover bid by Elon Musk, does not intend to let it go: the network took measures on Friday supposed to prevent the boss of Tesla, and the richest man of the world, to easily redeem its shares. This is the so-called “poison pill” clause in financial jargon: the Californian group plans to sell off its shares for all other shareholders. It will be triggered if Elon Musk exceeds 15% of Twitter shares without the agreement of the board of directors (CA). Elon Musk already owns just over 9% of the company’s capital.

The total price of the buyout could increase significantly

If he buys back enough shares to reach the 15%, all the other holders of shares on the platform will be able to buy them back at a reduced price, which would greatly increase the price that the entrepreneur would have to pay to get his hands on the social network. The plan must “reduce the possibility that any entity, person or group will take control of Twitter by accumulating stock in the market without paying all shareholders an appropriate premium or giving the board sufficient time to make informed decisions,” the San Francisco-based company said in a statement.

Twitter therefore intends to fight against this attempt by Elon Musk to buy it back to make it an unlisted company. “It was a defensive tactic that was predictable,” said Wedbush analyst Dan Ives. But it will not be perceived “positively” by shareholders, he predicts, given the risk of “dilution”. And the plan will “certainly be challenged in court” because the board has an obligation to act in the interests of the company and increase its value for shareholders.

Elon Musk says he has a plan B

Elon Musk on Wednesday presented a proposal to acquire the social network at a price that would value it at 43.4 billion dollars, against about 36 billion at present. He said Thursday he had “sufficient funds”, assured that he had a plan B if the Board refused his offer, and also that he was not looking to “make money”, during a live interview at the Ted2022 conference. He didn’t give specifics on the financing, but he would definitely have to borrow or divest some of his shares in Tesla or SpaceX, his spaceflight company.

Very active on Twitter, where he has nearly 82 million subscribers, but also very critical of the network’s content moderation policy, he claims to want to make it “the platform for freedom of expression in the world”, with fewer limits on what users can tweet. After repurchasing 73.5 million common shares of the company early last week, he was offered a seat on the board but ultimately turned it down on Sunday, after a series of suggestions to change the platform and derogatory tweets, wondering for example if the blue bird was “dying” because some very followed accounts post little.

Strong pressure exerted by the billionaire

On Friday, he tweeted “Thanks for the support!” with a poll conducted by “Bitcoin Archive”, titled “Do you want Elon Musk to buy Twitter?”. Some 73% of the 19,494 voters answered “yes”. A follower of the format, he also asked his own question: “Making Twitter a private company at $54.20 should be a matter for shareholders and not for the Board”. More than 83% of the 2.9 million votes went to “yes”. “I think it’s going to be quite painful and I’m not sure I’ll be able to buy it,” the whimsical entrepreneur admitted on Thursday, before explaining that he hoped to rally as many existing shareholders as possible to his project. .

One of them has already reacted: the Saudi prince and investor Al-Walid bin Talal declared on Twitter that he “rejected” an offer that was too low compared to the “intrinsic value of Twitter”. But the influence and pressure exerted by Elon Musk does not leave much room for Twitter executives, commented analysts at Wedbush Securities, who predicted a victory for the billionaire after many twists and turns.

“The board doesn’t want Musk because they disagree on just about everything and his style doesn’t fit their corporate culture,” Dan Ives said in an analysis published in the Daily Mail on Thursday. . “The board will be looking for someone or a group to make them a better offer. But it’s going to be difficult for other bidders to emerge.”

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