Twitter has moved to defend itself from the hostile takeover bid that Tesla president Elon Musk has undertaken. The social network has published a statement announcing a plan approved by the board of directors that will allow current owners to buy more titles. “The rights plan reduce the probability that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an adequate control premium.”
This mechanism known colloquially as the “poison pill” plan is often used to defend against takeovers. Twitter’s plan would come into effect if the participation of about 9% of Musk grows to 15% or more. At that point, since the rest of the shareholders can also buy at a discount, the percentage of the hostile party is diluted.
This plan to stop Musk’s offensive comes after he has already received his first denial of one of the most desirable shareholders. The president of Kingdom Holding Company (KHC), the Saudi prince Al Waleed bin Talal, has made the decision because he does not believe that “it comes close to the intrinsic value of Twitter given its growth prospects.” Musk has been slow to respond and has decided to pull irony by asking himself “How much does Kingdom Holding Company own of Twitter, directly and indirectly? What is Kingdom’s opinion on freedom of journalistic expression?”.
Musk’s operation to take control of Twitter began with a joke in which he charged against the deficiencies of the social network and offered to create a parallel in which he included what he considered to be essential changes. Shortly after, he bought 10% of the firm and after an invitation to the board, the tycoon rejected him because he was beginning his offensive: 43,000 million dollars at 54.2 euros per share (an 18% premium) to gain control of the company and delist it. “I invested in Twitter because I believe in the potential to be the platform for freedom of expression around the world and I believe that freedom of expression is a social imperative for a functioning democracy. However, since making my investment I have realized that the company will not thrive and serve this social imperative in its current form. Twitter needs to transform into a private company.”