Twitter’s board is considering using a ‘poison pill’ method to prevent Elon Musk from purchasing the company.
The 'poison pill' tactic is used by firms to discourage the ‘hostile takeover’ of acquiring companies - which in this case is Musk - by offering current shareholders discounted shares, essentially pushing out potential buyers because the flux in new shares pushes up the price of acquisition.
It was reported on Thursday that Twitter’s board of directors is unlikely to accept Musk’s offer, made earlier this week, to buy the social media platform for a whopping $41.39 billion (£31bn).
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That same day, the New York Times reported on Twitter’s intention to use the poison pill defence.
Earlier in April, Musk became the social media firm's largest single stakeholder with a 9.2 percent stake.
Explaining why he wants to buy the company in a letter to Twitter chairman Bret Taylor, the Tesla and SpaceX chief said: "Since making my investment I now realise the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.
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"My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder."
Speaking at the TED2022 conference in Vancouver on Thursday, Musk admitted he’s unsure whether his bid to buy Twitter ‘will be successful’.
“I am not sure that I will actually be able to acquire it," Musk said, as per the BBC.
Twitter shareholder Prince Alwaleed bin Talal was quick to dismiss Musk’s bid, tweeting on Thursday: “I don't believe that the proposed offer by Elon Musk comes close to the intrinsic value of Twitter given its growth prospects."
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Speaking to the BBC, Bruce Daisley, Twitter's former vice president for Europe, Middle East and Africa, accused Musk of ‘toying’ with the social media giant.
He said: "The latest bid he's put in, as far as I can tell, doesn't seem to be regarded as a serious bid but it is proving to be very disruptive with the organisation I think."
Daisley added: "To some extent the constant scrutiny of being a publicly listed company, following in the footsteps of the likes of Google and Facebook, is definitely a challenge for the organisation so private ownership might be the right solution.”
However, Daisley noted: “I'm not convinced Elon Musk's approach is going to win many fans though.”
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Topics: Elon Musk, Technology, Social Media