Bloomberg, citing people familiar with the matter, said that Twitter’s board of directors is considering using a defense measure to help protect the company from offers that could harm the business. These measures were reviewed after the world’s richest person Elon Musk, who already owns up to 9% of Twitter shares, made an offer to privatize this social network for $ 43 billion.
Bloomberg quoted an unnamed source as saying that one of the options being considered is called “poison” to protect shareholders’ interests. It is possible that Twitter will announce the implementation of this measure on April 16. Another scenario also being considered would be claiming the price Elon Musk offered to take Twitter private was too low.
Elon Musk caused waves on April 14 after offering to buy back Twitter for $54.2 per share in cash. This offer means Twitter is valued at $43 billion. Musk also said that this is his “best and last” offer. If not met, Musk will have other plans based on his interests as an investor.
The Twitter board of directors met to review Musk’s proposal to determine if it was in the best interests of the company and its shareholders. However, the company declined to comment on Musk’s offer or the strategy the board will implement.
The poison defense strategy gives existing shareholders the power to buy more shares at a discount, thereby diluting the adversary’s influence. This method is common in troubled businesses when investors put pressure on management or in situations where “enemies” want to take over the company.
In a filing that Musk filed with the US Securities and Exchange Commission, the world’s richest billionaire revealed that this is a high price and shareholders will like it. However, at least one well-known investor has said that the price is too low and the market reaction seems to agree with this view. Prince Alwaleed bin Talal of Saudi Arabia said the deal did not “approach the intrinsic value” of this popular social network.
For his part, Musk has also talked about a plan B if the proposed privatization of Twitter does not materialize. The billionaire said he’s not sure he can actually achieve Twitter’s plan to privatize, and in that case, he needs another option.
In trading on April 14, Twitter shares fell 1.7%, showing that the market believes the deal is likely to fall apart.
Bloomberg is not the only news agency to talk about the possibility that Twitter will use the method of prevention about “poison”. Earlier, the Wall Street Journal also said that the San Francisco-based social network was considering using this method.