The governing board of the social media and liberal political activist giant Twitter made it difficult for Elon Musk to purchase more than 15 percent of the shares of the company without triggering a policy that would crush the value of his shares. To block him, the board voted for something called a “poison pill,” a dilution of the company shares by authorizing the dumping of shares on the stock market at a discount price for existing shareholders, if Musk was able to get more than 15 percent of shares. That would cost the billionaire billions by diluting the value of his proposed $43 billion investment. Twitter’s board met Thursday to review the world’s richest man’s offer, which was $54.20 per share.
Earlier this year, Musk had acquired more than 9 percent of the company and started teasing on the platform that he was considering taking a controlling interest in the left-bias company that eliminates the accounts of conservatives and practices censorship of patriotic points of view. Twitter banned President Donald Trump, but allows Vladimir Putin to maintain an account. Twitter banned the satire account The Babylon Bee, but has allowed the site to be used by Antifa accounts that used it to organize violent protests in 2020.
Fox News’ Lucas Manfredi reported on Friday, “Under the plan, which is also referred to as a “poison pill”, shareholders’ rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of Twitter’s outstanding common stock in a transaction not approved by the board. In the event that the rights become exercisable, shareholders will be entitled to purchase additional shares of common stock at a discounted rate.
This was the board saying it would not approve the Musk purchase, as it attempts to “reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
“The goal is to force anyone trying to acquire the company to negotiate directly with the board. Investors rarely try to break through a poison pill threshold, according to securities experts — one said ‘it would be financially ruinous, even for him.’ But Mr. Musk rarely abides by precedent,” The New York Times wrote.
A press release from Twitter noted, “The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
The stock closed at $45.08 at the close of markets on Thursday.