As Twitter’s board weighs rejecting Elon Musk’s offer, the billionaire says decision should be up to shareholders
- Tesla CEO Elon Musk said his US$43 billion offer to buy Twitter should be left to shareholders after Twitter board adopted ‘poison pill’ defence
- The board is expected to reject the offer, which some shareholders say is too low, but if Musk triggers the poison pill, it could be disastrous for the company
The social media company has adopted a “poison pill” defence that makes it difficult for Musk or any other investor to buy Twitter without the board of directors’ approval. Musk, who currently owns about 9 per cent of the company, last week disclosed an offer of about US$43 billion, or US$54.20 per share.
Twitter’s next likely move is to formally reject Musk’s offer, although it could negotiate. Musk has a number of options which also include talks with the board, sweetening his offer, or even triggering the poison pill, which experts say would be disastrous for the company.
In a regulatory filing on Monday, Twitter’s board said it approved the defensive move to protect the company from “coercive or otherwise unfair” takeover tactics.
The board is leaving open the possibility of negotiating with Musk or another suitor. The filing says the shareholder rights agreement should not interfere with any merger or offer approved by the board.
Although he said his offer was “final”, Musk may have to raise his bid to satisfy other shareholders. A Saudi prince who is among Twitter’s major shareholders scoffed at the offer last week in a tweet. Al Waleed bin Talal said he didn’t believe US$43 billion is close to Twitter’s value given its growth prospects. Twitter shares hit an all-time high of US$77.63 in March 2021.
When he made his offer public, Musk provided no details on financing, but such a disclosure could improve his chances. He could raise money by borrowing billions using his stakes in Tesla and SpaceX as collateral, and he could bring in other investors.
The poison pill would give stockholders as of April 25 the right to buy one one-thousandth of a share of preferred stock for each common share they own, at a price of US$210. The rights are triggered if any person or group of investors buys 15 per cent or more of the company’s shares without board approval.