Elon Musk’s hostile bid of $43 billion for Twitter has the company scrambling to find other solutions to ensure that the unwelcome stakeholder has limited control over the company.
Twitter implemented a “poison pill” allowing for current stakeholders to purchase stock at a discounted rate diluting Musk’s ownership of the company giving them more time to find alternate solutions.
Twitter's plan is to adopt a year-long shareholder rights plan intended to “enable all shareholders to realize the full value of their investment in Twitter”. The goal is to prevent Musk from ever obtaining greater than a 15% stake in the company and end his hopes of gaining control. Musk has threatened Twitter by stating that “if it is not accepted, I would need to reconsider my position as a shareholder,” referring to his attempt at obtaining more stock. The company is concerned that if Musk obtains more than 15% of the stock, he will be able to indirectly control the direction of the company without having formal executive control.
Twitter has also looked at other options for limiting Musk’s push for control as the private equity firm Thoma Bravo has expressed interest in bidding against Musk and taking the company private. Thoma Bravo has a total of $103 billion in assets and a bid against Musk would be a significant increase in their portfolio. Twitter has also expressed interest in a takeover by other entities and has looked at JPMorgan Chase and Co. for help. JPMorgan has begun assisting the company in finding any potential buyers.
Musk has stated that he is unsure that he will be able to acquire the company. He has several assets to back his $43 billion proposal, however, he did state that “I’m not sure that I will actually be able to acquire it.”
Source: Financial Times