Twitter’s board of directors doesn’t seem interested in Elon Musk’s takeover of the social network, according to a report published by Information. Everything indicates that they will recommend that shareholders oppose the takeover bid made public today, for $43 billion Is $54.20 per share.
Moreover, as indicated by the the wall street journalTwitter’s board of directors is considering following the strategy of the poison pill to discourage hostile takeovers by the CEO of Tesla and SpaceX.
Elon Musk, during a TED interview, explained that in case Twitter doesn’t accept his offer, he has a “plan B”, although he didn’t give more details. But it’s probably related to what was said in the press release with the offer to purchase, where he indicated that, if he receives a negative response, “he will have to reconsider his position as an investor in the social network “.
The board of directors of Twitter will host a meeting to answer questions about Elon Musk’s offer at 2:00 p.m. local time in San Francisco (4:00 p.m. in Mexico, 11:00 p.m. in Spain).
The poison pill strategy to discourage Elon Musk and his attempt to take over Twitter
The poison pill strategy involves taking a series of actions that discourage a hostile takeover of a business. In this case Twitter. This could be done in several ways.
One would be to allow current shareholders, except the one interested in the acquisition, to buy more shares at a reduced price, known as to fall over. In this way, investors get immediate benefits and at the same time the shares held by the person interested in the hostile takeover are diluted. In this case Elon Musk.
In this way, the attempt becomes more complicated and the value of the acquisition increases significantly. So much so that he loses interest in making the purchase on Twitter.
The other solution would be to allow shareholders to buy shares of Elon Musk at a lower price once the transaction is concluded. In short, shareholders obtain the right to buy shares from the acquirer at a significant discount, for example at a quarter of the share value. movement known as to return to.
This can also be done by issuing a large number of preferred shares to existing Twitter investors. These have significant limitations and cannot be converted into common stock for purchase and sale in the market, especially in the event of a hostile takeover bid.
This immediately dilutes the shareholder’s percentage in the takeover and makes buying shares much more expensive. This technique is known as a preferred stock plan.