Ilona Maska’s Twitter profile, shown on a computer screen, and the Twitter logo displayed on the phone screen, can be seen in this illustration made in Krakow, Poland on April 9, 2022.
Jakub Porzycki | Nurfota | Getty Images
Twitter adopted a limited shareholder rights term, often referred to as a “poison pill,” a day after billionaire Elon Musk offered to buy the company for $ 43 billion, the company said Friday.
The council voted unanimously to adopt the plan.
Under the new structure, if an individual or group acquires beneficial ownership of at least 15% of the total shares of Twitter in circulation without the approval of the board of directors, other shareholders will be allowed to purchase additional shares at a discount.
The plan expires on April 14, 2023.
Such a move is a common way to fend off potential hostile takeovers by reducing the share of the entity watching the takeover.
“The rights plan will reduce the likelihood that any organization, individual or group will gain control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without giving the Board enough time to make informed judgments and take action that is the best. the interests of shareholders, ”the company’s press release reads.
Twitter noted that the rights plan would not prevent the board from accepting the acquisition offer if the board deems it in the interests of the company and its shareholders.
Musk already owns more than 9% of Twitter’s shares, according to a statement from the Securities and Exchange Commission last week. Shortly after his share went public, the CEO of Twitter announced plans for Musk to join the board of directors. But a few days later Musk changed course and decided not to join the council.
Had he joined, Mask would not have been allowed to accumulate more than 14.9% of the company’s beneficial shares.
Also Friday, Bloomberg reported, citing anonymous sources, that Twitter had hired JPMorgan to help respond to Mask’s request. Twitter has already worked with Goldman Sachs, and Musk has worked with Morgan Stanley.
Several publications, including The New York Post, reported that Twitter was also showing interest from Tom Bravo, but there is no certainty that the application will materialize, according to sources who spoke to Reuters.
JPMorgan has a story with Mask suing Tesla in a case involving his tweet in 2018, claiming he had “secured funding” to make the company private. Tesla later filed a counterclaim against the bank.
JPMorgan, Twitter and Tom Bravo declined to comment.
In a live interview at the TED2022 conference in Vancouver on Thursday, Musk outlined his vision to make Twitter’s algorithms more publicly available and limit content moderation.
He also admitted that he was “not sure” whether he would be able to buy Twitter, although he said he had “sufficient assets” to fund the deal if it was accepted. Despite his own fortune, Mask owns much of his assets due to shares in his companies, including Tesla, which means he will most likely have to liquidate or borrow his assets to get a large sum.
But Musk said Plan B “exists” if his initial offer to buy the company and transfer it to private, which he called “the best and final,” will be rejected. He declined to give more details in a TED interview.
On Friday, former Twitter CEO and current board member Jack Dorsey wrote on Twitter that the “real problem” is that “as a public company, Twitter has always been“ for sale ”.
Subscribe to CNBC on YouTube.
WATCH: Twitter, Goldman Sachs and IBM are some of today’s promotions: Pro Market Movers April 14