Elon Musk’s Twitter account seen on a smartphone in front of the Twitter logo. (Photo: Reuters)
Twitter was set to unveil its counterattack on Elon Musk as early as Friday by enacting a corporate maneuver known as the poison pill, according to two people familiar with the company’s plans who were not authorized to speak publicly.
The strategy is said to be aimed at slowing down or blocking Musk’s $43 billion bid to buy Twitter.
A poison pill, devised by law firms in the 1980s to protect companies from corporate thieves, essentially allows a takeover target to flood the market with new shares or allow existing shareholders to buy them. buy at a discount. This means that anyone trying to acquire the company has to buy a lot more shares to take control of it.
Details of Twitter’s poison pill design were not known.
On Thursday, Musk announced his intention to acquire the social media service, a purchase he said would allow him to reverse Twitter’s moderation policies.
Twitter has tried to vie for the world’s richest man in recent weeks as it regularly swipes his shares. Twitter last week offered Musk a seat on the board, but he backtracked on the arrangement when it became clear he would no longer be able to freely criticize the company. He rejected the role on Saturday and took to Twitter on Wednesday evening of his acquisition plans.
Musk appeared to be gearing up for an extended fight on Thursday.
“Making Twitter private at $54.20 should be up to shareholders, not the board,” he tweeted, alongside a Yes/No poll.
Still, it’s unclear who, if anyone, will side with Musk. Its initial offer, stripped down, left open important questions about its ability to raise financing. Musk has hired Morgan Stanley to advise on the offer, although the investment bank isn’t generally known for funding large-scale deals on its own. And Twitter shareholders seemed wary: Twitter shares fell nearly 2% on Thursday, closing at $45.08, significantly lower than Musk’s offer.
Saudi Arabia’s Prince Alwaleed bin Talal, who has described himself as one of Twitter’s largest and longest-term shareholders, said Thursday that Twitter should reject Musk’s offer because it was not not high enough to reflect the “intrinsic value” of the business. Analysts also suggested that Musk’s price was too low and did not reflect Twitter’s recent performance.
Musk argued that privatizing Twitter would allow more free speech to flow on the platform.
“My strong intuitive feeling is that having a broadly inclusive, maximum-trust public platform is extremely important to the future of civilization,” he said in a TED Talk interview on Thursday.
He also insisted that the algorithm used by Twitter to rank its content, deciding what hundreds of millions of users see on the service every day, should be public for users to audit.
Musk’s concerns are shared by many Twitter executives, who have also called for more transparency about its algorithms. The company published internal research on bias in its algorithms and funded an effort to create an open and transparent standard for social media services.
But Twitter executives balked at Musk’s tough tactics. After a Thursday morning board meeting, the company began exploring options to block Musk, including the poison pill and the possibility of wooing another buyer.
At a town hall meeting on Thursday afternoon, Twitter CEO Parag Agrawal sought to reassure employees about the potential upheaval. Although he declined to share details of the board’s plans, he encouraged employees to stay focused and not get distracted by Musk.
SpaceX owner and Tesla CEO Elon Musk grimaces after arriving on the red carpet for the Axel Springer Prize in Berlin, Germany, December 1, 2020. (Photo: Reuters)
This article originally appeared in The New York Times.