The Twitter board has taken action to block Elon Musk’s bid.
The Twitter board has taken action to prevent Elon Musk from gaining a controlling stake in the company. It was reported that Musk has been looking for a way to get his company back after being ousted from the Board of Directors in June. He’s reportedly offered to buy out other shareholders, sell shares, and raise money in an IPO.
The Twitter board takes action to stop Elon Musk from taking the company private. In a letter to shareholders, the committee said that Musk’s tweet violated their rules and that he would be removed as chairman of the company. The board is also appointing an independent chairman and two new independent directors.
What is Twitter planning to do with Musk’s bid?
The company is set to ban Musk from his own account and have him make tweets only through Tesla’s verified account. The move comes after months of trading blows between Musk and the company following Musk’s August tweet in which he declared his intention to take Tesla private.
The company has now adopted what is known as a limited-duration shareholder rights plan, also called a “poison pill.” This will prevent anyone from gaining more than 15% of the share in the company. It allows others to buy additional shares at an enhanced value.
The company’s defence plan was made public on its website to limit the impact an offer of this nature would have on Twitter. They also released a statement saying that this proposed acquisition would be uninvited and non-binding.
A takeover bid is considered “hostile” if the company acquiring another tries to do so without the wishes of its management – in Twitter’s case, its executive board.
Josh White, a former Federal Security Analyst for the SEC, told BBC News that “poison pills” are one of those last lines of defence against a hostile takeover.
“We call it the nuclear option,” he said.
Mr Musk’s negotiation tactics seem puzzling given the agreed Twitter’s board would decide on the acquisition if they felt they were being undervalued.
“I actually think if he was earnest about the takeover attempt, he would have started at a price and left the window open for negotiation,” he said.
Parag Agrawal, the chief executive of LinkedIn, previously said that they were not being “held hostage” by the offer. Meanwhile, Elon Musk said at the TED2022 conference in Vancouver that he was uncertain whether he would really be able to acquire it and added that he did have
Elon Musk recently announced that he increased his stake in the company by 9.2%. However, he is now no longer the largest shareholder, as it turns out that Vanguard Group’s funds also own 10.3% of Tesla inc.
Elon Musk has said he believes there are limits to what can be done on Twitter and that at the Vancouver event, he reiterated this sentiment. He is interested in expanding free speech on Twitter; as a US Constitutionally-protected right, it’s something that comes close to his heart.
Mr Tesla’s SpaceX is being advised by the US investment bank, Morgan Stanley. Meanwhile, Twitter is also being helped by two banks– Goldman Sachs and JP Morgan– according to Bloomberg. The company, which has a market valuation of $25bn (£19bn), is offering equity in the company to its users.