Twitter's board of directors approved some extraordinary rules on Friday to limit the risk that a single shareholder of the company could take control by picking up more shares in the market. In fact, the newspapers write, the rules were introduced to prevent billionaire Elon Musk from buying the company, as he himself announced he wanted to do a few days ago with an offer to all current Twitter shareholders.
Under the new rules approved by Twitter, for the next year all Twitter shareholders will have the right to buy new shares at a discounted price should another shareholder come to control more than 15 percent of the company's shares. This rule is known in financial jargon as the poison pill – and is used by listed companies to defend themselves against so-called hostile takeovers, those acquisitions that are made only through the purchase of enough shares on the market to take control of a company. without the approval of the company's board of directors.
Now, if a Twitter shareholder were to come to control more than 15 percent of the company's shares, the other shareholders would have the option of buying new shares at a discounted price, diluting the share of shares controlled by the first shareholder and forcing him to buy. many more to gain control of the company. Twitter's board of directors announced the new rules on Friday without explicitly referring to the takeover bid submitted by Elon Musk, but according to leading US newspapers, the plan was designed to stop him from buying the company, or at least to stop him from doing so. with a hostile takeover.
A few days ago, Musk – who is the richest person in the world and the CEO of Tesla and SpaceX – had offered $ 54.20 for each Twitter share, saying he wanted to buy the whole company. The previous week, moreover, it was known that Musk had bought just under 10 percent of the shares of Twitter, becoming one of the largest shareholders (for a few days he was the main shareholder, but was later overtaken by the Vanguard Group fund). . These innovations have generated a lot of attention, because Twitter is one of the most used and relevant social networks in the world and any news in the way it is managed could have enormous effects.
One of Twitter's concerns is likely that if Musk controlled more than 15 percent of the company's stock, he could in fact control or manipulate its decisions, even without having a formal role in Twitter. Now it will be much more difficult for this scenario to occur and if Musk wants to proceed with the purchase of Twitter he should probably do so by seeking a deal with the company, with higher costs.
The $ 54.20 offered by Musk for the Twitter shares are high compared to Twitter's market value over the past month – a period of general weakness for tech companies – but few compared to the value achieved by shares over the past year. As TechCrunch explained, there does not appear to be any particular problems in Twitter's business at the moment and it is therefore possible that its shares will gain value in the coming months.
