Elon Musk is apparently in negotiations with possible investors regarding a bid for Twitter, and a new proposal with the partners might be unveiled within a few days, according to reports. According to those familiar with the subject, one option is working with Silver Lake Partners, a private equity group that was slated to co-invest with Musk in 2018 when he was contemplating taking Tesla private, according to the New York Post.
A member of the Twitter board of directors, Egon Durban handled Musk’s negotiating team during the company’s unsuccessful effort to take Tesla private in 2018. Durban is also the co-CEO of Silver Lake. Despite repeated requests for comment, Silver Lake did not provide any. Uncertainty surrounds whether Elon Musk would make an entirely new bid to Twitter, maybe increasing his present offer, or if additional partners would simply join him in the acquisition.
Meanwhile, on April 15, Twitter’s board of directors took a defensive action in response to Musk’s aggressive purchase approach for $43 billion – the microblogging network adopted the ‘poison pill’ as a means of deterring other companies from making similar acquisition offers. The ‘poison pill,’ as it is called in the business world, provides current Twitter shareholders with more time to purchase additional shares at a reduced price, therefore decreasing Musk’s ownership position.
In order to make it impossible for anybody, even the billionaire, to purchase an interest in the firm worth more than 15 percent, the corporation has taken this action. This so-called ‘poison pill’ tactic was created in the 1980s by the New York-based legal firm of Wachtell, Lipton, Rosen, and Katz, among others. The term derives from the poison tablets that spies used to avoid being questioned by their adversary if they were captured by their adversary.
It was established in order to prevent an acquiring company from obtaining a majority interest in a prospective target or from directly bargaining with shareholders in an era when takeovers were becoming more common.
Note that there are two sorts of ‘poison pill’ strategies: the flip-in strategy and the flip-over strategy, both of which are effective. In terms of popularity, the flip-in option is the more popular of the two.
Twitter, on the other hand, has failed to file its shareholder rights plan with the Securities and Exchange Commission, despite the fact that the company announced the ‘poison pill’ in a statement.
Whether it is unlawful for like-minded investors to combine their money in order to purchase a stake worth more than 15 percent will be revealed in the SEC filing.
Taking the Charge
Musk stated earlier this month that he has a 9.2 percent interest in the social media platform Twitter. He then announced his appointment to the company’s board of directors and immediately started making modifications to the platform, including transforming the company’s headquarters into a homeless shelter for the needy. Musk has remarked on multiple occasions that he feels Twitter does not adhere to “free speech ideals,” and he has even advocated for the establishment of a rival network in which free speech and the preservation of free speech are given top importance, according to Musk.
In the end, the Tesla CEO resigned from the board of directors and made an offer to purchase the firm for $54.20 a share, but he did not specify how he intended to pay for it. As a result, Saudi Arabian tycoon Prince Alwaleed bin Talal said this week that, as one of Twitter’s primary owners, he had rejected the proposed takeover transaction. Meanwhile, according to other sources, a private equity firm, Thoma Bravo, has said on Twitter that it is contemplating making a competitive bid for the business.
Twitter, on the other hand, claimed in a statement on April 15 that the company’s “Board of Directors has unanimously authorized a limited-term shareholder rights plan… Following an unsolicited and non-binding bid to purchase Twitter, the Board of Directors approved the Rights Plan.” According to the Rights Plan, “any entity, person or group gaining control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board with sufficient time to make informed decisions and take actions that are in the best interests of shareholders will be less likely.” “The company went on to say more.
Source: News18