Elon Musk makes an offer to buy Twitter

Two people familiar with the situation said the Twitter board is considering a defensive move known as the poison pill that would severely limit Elon Musk’s ability to take over the social media giant.

The board met on Thursday to discuss Mr. Offer to buy the company, according to one person, who was not authorized to speak publicly. Directors are considering whether to go ahead with a pill — officially called a shareholder equity plan — that would limit the ability of a single shareholder, like Mr. Musk, to gain a critical mass of stock on the open market and force the company into a sale.

Defending the poison pill is a common tactic used by companies that want to fend off unwanted takeover offers. It basically allows the company to flood the market with new shares or allow existing shareholders other than the potential acquirer to buy shares at a discount. This dilutes the bidder’s share and makes buying the shares more expensive.

The Wall Street Journal I mentioned earlier That Twitter weighed a toxic pill.

If the Twitter board rejects Mr. Musk’s offer, he can make his offer directly to shareholders, rather than the board, by launching a so-called tender offer. If other Twitter shareholders like Mr. Musk’s offer, which is currently $54.20 a share, they can sell their shares directly to the billionaire, allowing him to take control of the company.

“It would be completely unjustified not to make this offer to shareholders,” Musk said in a tweet on Twitter Thursday. “They own the company, not the board of directors.”

But Twitter investors on Thursday seemed overwhelmed by Mr Musk’s attempt, possibly due to concerns about it How will he finance it?. While company stocks usually rise when there is takeover speculation, Twitter shares fell nearly 2% on Thursday.

Prince Alwaleed bin Talal of Saudi Arabia, who described himself as one of Twitter’s largest and most long-term contributors, said Twitter should reject Mr. Musk’s offer because the offer was not high enough to reflect”intrinsic valueThe company.

Twitter’s other major shareholders, according to FactSet, include Vanguard Group, the company’s largest shareholder, with a 10.3 percent stake; Morgan Stanley Investment Management, with an 8 percent stake; and BlackRock Fund Advisors with a share of 4.6 percent. Vanguard and Morgan Stanley Investment Management declined to comment on Mr. Musk’s offer. BlackRock did not immediately respond to requests for comment.

Mr. Musk declined a seat on the Twitter board Over the weekend, he left managers who had welcomed him recently in their ranks to evaluate a proposal in which Mr. Musk said he did not trust their management of the company.

The Board of Directors consists of Twitter Insiders, including Jack Dorsey, co-founder, and CEO, Parag Agrawal, as well as the independent directors.

Brett Taylor, co-CEO of Business Technology Salesforce, chairs the board. Mr. Musk sent a text message to Mr. Taylor on Wednesday night, explaining that he intends to buy Twitter, according to a regulatory filing. “After the past several days of thinking about this, I’ve decided I want to take over the company and take it private,” Mr. Musk wrote.

Salesforce considered buying Twitter in 2016, but the deal never materialized. Mr. Taylor, who has been a Twitter board member since 2016, joined Salesforce a year later after it acquired his own company, Quip.

Another key player on the board is Egon Durban, co-chair of Silver Lake, a private investment firm. Mr. Durban joined Twitter’s board of directors in 2020 as part of the company’s deal With another active investor Who wanted to change the management of Twitter.

At the time, Silver Lake invested in Twitter and helped stabilize its management, preventing the immediate ouster of Mr. Dorsey. Since Silver Lake has helped Twitter out of a difficult situation in the past, Mr. Durban may face questions about whether his company can double down and help fend off Mr. Musk.

Mr. Dorsey could also influence the decision. He is a friend of Mr. Musk and initially celebrated Mr. Musk’s investment in the company and his decision to join the Board of Directors. But Mr. Dorsey often delegated key decisions to his team, preferring to rely on their expertise. And Mr. Dorsey is also ready to leave the Twitter board Next month, which may give him another reason to step aside.

His allies on the board are Mr. Agrawal, who was named his successor late last year, and Patrick Beechette, general partner at venture capital firm Inovia Capital and former chief financial officer of Google.

Mr. Agrawal and Mr. Dorsey have been closely aligned with a vision of making Twitter technology more decentralized, and Mr. Pichette has been close to Mr. Dorsey in discussions about Twitter’s long-term plan. Mr. Beckett may also have had experience negotiating with Mr. Musk – he was at Google in 2013 I thought about buying a Tesla.

Mike Isaac Contribute to the preparation of reports.