The head of twitter is considering adopting a measure that would protect the company from hostile takeover bids, following the unwelcome proposal of the billionaire Elon Musk to take the company private.
One of the options under consideration is to adopt a ‘poison pill’, known as shareholder rights plansaid people who asked not to be identified due to private deliberations. Twitter could announce this pill as soon as this Friday, April 15. Another scenario under consideration is to say that the supply is too low.
The CEO of Tesla offered this Thursday $54.20 per share in cash for Twitter, valuing the social media company at $43 billion. Musk, who said it was his “last and best” offer, had already amassed a more than 9 percent stake in Twitter since the beginning of this year.
The board of directors of the social network met this day to review Musk’s proposal and determine if it was the best for the company and all its shareholders. The company declined to comment on the offer or the board’s strategy.
A poison pill defense strategy allows existing shareholders the right to purchase additional shares at a discount, effectively diluting the ownership stake of the hostile party. Poison pills are common among companies under fire from activist investors or in hostile takeover situations.
Included in Musk’s securities filing revealing the offer was a text script that he sent to the company. In it he said: “it is a high price and its shareholders will love it”.
However, at least one prominent investor said the offer was too low and the market reaction seemed to agree. Saudi Arabia’s Prince Alwaleed bin Talal said he “doesn’t come close to the intrinsic value” of the popular social media platform
Speaking later at a TED conference, Musk said he wasn’t sure that “can i really get it”. He added that his intention was also to retain “as many shareholders as the law allows,” rather than maintain sole ownership of the company.
The twitter shares they fell 1.7 percent in New York on Thursday, reflecting the market’s view that the deal is likely to be rejected or fail. The Wall Street Journal previously reported that the San Francisco-based company was considering a poison pill defense.