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Twitter Adopts Poison Pill in Bid To Thwart Elon Musk Takeover (axios.com) 249

Twitter's board on Friday enacted a defensive measure meant to deter Elon Musk's $43 billion hostile takeover bid. From a report: The "poison pill," as it's called in corporate terms, gives Twitter's existing shareholders time to purchase additional shares at a discount, thus diluting Musk's ownership stake. Musk disclosed a 9.2% stake in Twitter earlier this month. He then announced he was joining the company's board of directors and began proposing several changes to the platform, including turning the company's headquarters into a homeless shelter. [...] He later backed out of joining the board and offered to purchase the company for $54.20 a share, though he did specify how he planned to pay for it. Twitter said in a statement that "its Board of Directors has unanimously adopted a limited duration shareholder rights plan. ... The Board adopted the Rights Plan following an unsolicited, non-binding proposal to acquire Twitter."
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Twitter Adopts Poison Pill in Bid To Thwart Elon Musk Takeover

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  • by Anonymous Coward on Friday April 15, 2022 @11:33AM (#62449672)
    "gives Twitter's existing shareholders time to purchase additional shares at a discount, thus diluting Musk's ownership stake. Musk disclosed a 9.2% stake in Twitter earlier this month"
    Musk is an existing shareholder. Thus he can buy additional shares at a discount. Since he's offering to buy all Twitter stock, that means he has enough money to buy more of these additional shares than other shareholders, thus solidifying his stake?
    • by xaosflux ( 917784 ) on Friday April 15, 2022 @11:39AM (#62449690) Homepage

      The article was sparse on details, however SRP/Poison Pills typically only offer this discount to minority shareholders (e.g. 5% shareholders) or shareholders that have had shares vested for some period - in either case it would exclude Elon.

    • by SuperKendall ( 25149 ) on Friday April 15, 2022 @11:40AM (#62449696)

      Musk is an existing shareholder. Thus he can buy additional shares at a discount.

      No, they already thought of this (not the first time a plan like this has been put in place):

      In the event that the rights become exercisable due to the triggering ownership threshold (15%) being crossed, each right will entitle its holder (other than the person, entity or group triggering the Rights Plan, whose rights will become void and will not be exercisable)

      From the more detailed news story [prnewswire.com] the Slashdot linked story pointed to.

    • by niftydude ( 1745144 ) on Friday April 15, 2022 @11:40AM (#62449700)
      It means they're so desperate to continue to influence conversations, they'd rather tank the share price than accept a large premium on their shares.

      How is this decision good for shareholders?
      • by jacks smirking reven ( 909048 ) on Friday April 15, 2022 @11:44AM (#62449724)

        According to one of the members of the board he feels the growth potential of Twitter is more valuable than Musk's current offer. Considering this decision was unanimous it seems the board agrees and they are in fact the largest shareholders.

        • by cayenne8 ( 626475 ) on Friday April 15, 2022 @11:55AM (#62449770) Homepage Journal

          According to one of the members of the board he feels the growth potential of Twitter is more valuable than Musk's current offer.

          I believe that is the Saudi that said that.

          This brings up something that should have been obvious to me, but I missed it till just yesterday.

          I'd not thought of foreign nationals owning majority shares of our US social media sites.

          Talk about foreign influence over the US!?!?!?

          I think that makes is very scary as to how much sway over US politics and culture and how we react and act towards other countries, IF they can control the narrative in the US.

          That's almost better than buying politicians.

          Perhaps we need to start by requiring social media sites to publicly the % of it being owned by non-US citizens, etc....so as to know how much/little to trust what is coming out of those information silos.

          I'm guessing "hell yes" that the Saudis would figure very little money offered would be more valuable than holding sway over public opinion in the US.

          • So, more government regulation over corporations? Who says the left and right wing can't agree on anything.

            • So, more government regulation over corporations?

              Well, I don't think any of us really have a problem with govt requirements for food labeling, for example where seafood comes from (I don't buy foreign seafood)....

              I wouldn't have a problem requiring US social media sites having a website label you could readily check to see potential non-US ownership and influence.

              Would you have a problem with something as simple as that?

              Hey, it could be like the "fact checkers" the SM sites have, they'd just have a crew

              • Well, I don't think any of us really have a problem with govt requirements for food labeling

                My friend, there are more an-caps out there you might think. I have mad many a discussion with people who absolutely want to dissolve the FDA immediately and let "the free market" determine food safety.

                I don't have problems with labelling foreign ownership, nor would I really have an issue with some specific laws limiting what kind of foreign ownership can be done and disclosures about it. In my improved system I would actually like the United States to have a large Sovereign Wealth Fund that exercises mo

              • by mspohr ( 589790 )

                The other big problem is that corporations spend a lot of money on "lobbying" (i.e. bribes) to politicians.
                Since most corporations have foreign shareholders, then this would be illegal foreign lobbying in US politics.

          • by Rei ( 128717 )

            The Saudi investor only owns like 5%-ish of Twitter.

          • by rsilvergun ( 571051 ) on Friday April 15, 2022 @01:20PM (#62450064)
            Where were you when Russia was flooding Twitter and Facebook with bots? Come to think of it they're still doing that where are you now?

            And anyway I'm way more worried about foreign investors buying up all the single family homes than I am about them buying shares of Twitter. The Saudis control of Twitter is a lot less of a concern anyway and the fact that we're still heavily dependent on their oil because we refuse to shift to renewables. We've got way bigger fish to fry than Twitter
            • And anyway I'm way more worried about foreign investors buying up all the single family homes

              I'm concerned about this too.

              The Saudis control of Twitter is a lot less of a concern anyway and the fact that we're still heavily dependent on their oil because we refuse to shift to renewables.

              I think we need to push heavily into renewables, and until they are a realistic medium for us to switch fully onto, I think we need to have the US Feds take off the restrictions and encourage extreme domestic oil producti

      • But it's entirely possible they're holding on to the stock because they expect a long-term dividends to be worth more than what musk is going to pay. It says a lot about our society and our economy that that possibility never crosses anyone's minds.
  • by splutty ( 43475 ) on Friday April 15, 2022 @11:41AM (#62449706)

    He did? Or he didn't? Kind of important for the story. And I'm almost 100% sure it's "didn't"...

  • Hodl TWTR !!

    Seriously, who would sell twitter at this point?

  • Remember when New Corporation bought MySpace & what happened to it shortly after? Twitter'd probably go down the same way if Musk bought it.
  • Someone who will actually hold the Twitter workforce and leadership accountable for weaponizing Twitter to support progressive causes. For example, someone like Musk who would order every moderator who has gone after the Babylon Bee to be fired with cause.

    Or on a more ominous note, someone who who demand the firing of all of the employees who participated in shutting down the 2020 discussions about the Hunter Biden laptop story which is now absolutely not disputed by anyone except foaming-at-the-mouth anti-

    • of Musk pump and dumping their stock. Seriously, it became painfully obvious Musk wasn't going to pull off a hostile takeover when the Saudis blocked him. They've got more than enough shares to do it.

      What they're doing is saying "Go away and stop fucking with our stock, we're not going to let you do that, and if you try you'll lose money".

      Ordinarily companies don't have to do that, because the that's the SEC's job. But the SEC seems to have stopped doing it's job. That can't end well for any of us.
      • by JBMcB ( 73720 ) on Friday April 15, 2022 @12:44PM (#62449954)

        of Musk pump and dumping their stock.

        He's offering a $20 premium buying the stock, and doing it very publicly. I don't think you know what a pump and dump scam is.

        • by AmiMoJo ( 196126 )

          He already owns 9%.

          He kept that quiet longer than the mandatory 10 day reporting period, which is currently the subject of a lawsuit from investors who feel they were the victims of a scam.

          If he sells those shares and then announces he is giving up on buying Twitter, it will be a pump and dump.

          • > He kept that quiet longer than the mandatory 10 day reporting period, which is currently the subject of a lawsuit from investors who feel they were the victims of a scam.

            He just offered them 30% more than they think they missed out on.

        • He's not expecting anyone to really take him up on that offer. What he is expecting is a whole bunch of new investors moving into buy Twitter stock and increasing the value of his share. Which you will then dump.
      • What they're doing is saying "Go away and stop fucking with our stock

        To the detriment of most of their shareholders. They brought in Goldman to publicly announce it was a bad deal, and then someone dug up Goldman's own ratings [gab.com] for Twitter...

        Sell, PT: $30.

        The idea they're afraid of a P&D is hilariously unsupported by the financial reality. The fact is that Musk offered Twitter shareholders an absolute steal of an exit plan for their stock beyond what Wall St thinks it's worth.

        • Goldman Sachs isn't the end all be all. All Goldman is saying anyway is that they think the stock price might go down. I'll remind you this is the same Goldman Sachs that didn't see the 2008 market crash coming, and if they are claws weren't so dug into the treasury department would have gone out of business.

          You're also looking at it all wrong. When Goldman says sell they're not seeing you need to bail on Twitter they're saying that if you sell now you can buy back later if you want and make a profit. I
    • by quantaman ( 517394 ) on Friday April 15, 2022 @12:12PM (#62449832)

      Someone who will actually hold the Twitter workforce and leadership accountable for weaponizing Twitter to support progressive causes.

      Actually they're probably afraid of losing control because they're ordinary humans.

      Remember what a hostile takeover is, an attempt to offer enough money that enough of the shareholders agree to sell the company. Generally, if it's a good deal for the shareholders they'll accept.

      However, these poison pills pop up in every hostile takeover. Why? Because the board members and senior management care more about protecting their jobs and are willing to hurt the shareholders' interests to do so.

      Now, they also care about the company as they built it surviving, but they're essentially trying to keep their own jobs.

      For example, someone like Musk who would order every moderator who has gone after the Babylon Bee to be fired with cause.

      Or on a more ominous note, someone who who demand the firing of all of the employees who participated in shutting down the 2020 discussions about the Hunter Biden laptop story which is now absolutely not disputed by anyone except foaming-at-the-mouth anti-Trumpers who would deny the sky is blue if Trump said it was blue.

      So what you want, in a nutshell, is an ideological purge of moderators you disagree with and "foaming-at-the-mouth anti-Trumpers". Moves I'm sure you frame as supporting "free speech".

    • Aw man, all you needed to mention was "but her emails!" and I could've nailed BINGO

      • BINGO?!? More like "Benghazi", amiright? I can't pop corn fast enough to keep up today.
  • The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders

    What sort of control premium are they imagining here? Musk already offered to pay a decent premium above the market price of the stock.

    AFAIK, you can't dilute a shareholder of common stock without issuing new shares, which dilutes all existing shareholders. They could issue preferred stock with increased voting power per share, and prevent Musk from purchasing those. There may still be workarounds though - he could be able pay proxies to buy up the preferred stock and later transfer it to him.

  • She woke-shamed Elon Musk into selling some of his Tesla shares, now he has enough cash to get fooled into doing stupid stuff for the authoritarian nationalist mob. Congratulations you stupid greedy bitch.

    • Re: (Score:3, Insightful)

      by quantaman ( 517394 )

      She woke-shamed Elon Musk into selling some of his Tesla shares, now he has enough cash to get fooled into doing stupid stuff for the authoritarian nationalist mob. Congratulations you stupid greedy bitch.

      Musk didn't sell his Telsa shares because he was shamed into it, he sold his shares because Telsa is ridiculously overvalued. It's doubtful it can grow in value much more, and all that needs to happen is another car company to come out with a hit EV and/or self-driving car and the value plummets.

      • by steveha ( 103154 ) on Friday April 15, 2022 @04:07PM (#62450534) Homepage

        Musk didn't sell his Telsa shares because he was shamed into it, he sold his shares because Telsa is ridiculously overvalued.

        Elon Musk sold a bunch of shares because he had a giant pile of stock options maturing. He needed to get money to buy them, and then he needed more money to pay the tax bill on getting the money, and while he was at it he got an extra-large chunk of cash.

        He sold a bunch of shares, but his options gave him even more shares, so net he ended up with more shares of Tesla [insideevs.com] than before he sold shares. So your theory that Musk was dumping Tesla stock because he knows it will be worth less in the future is trivially disproven.

        It's doubtful [Tesla] can grow in value much more, and all that needs to happen is another car company to come out with a hit EV and/or self-driving car and the value plummets.

        I disagree. I used to think that the legacy car companies would pose serious competition for Tesla, starting around 2020. It didn't happen, and hasn't happened yet, and it won't happen anytime soon. Real competition has to arrive at some point but Tesla will be several times bigger by then.

        There is so much demand for Tesla cars that Tesla has been repeatedly forced to raise prices. Typical margins for the car industry have been around 7.5% in the past half-decade, and Tesla is making 30% per car, and now simply raising the price and still selling all their cars. Raising the price without costs going up means margins get better.

        Why do customers keep buying Teslas even when Tesla raises prices? Because Tesla cars are actually better than other available BEVs. Watch a Sandy Munro car teardown video. My favorite was the Ford Mach E video where they showed all the little hoses and fasteners from the Mach E cooling system, and compared it to the shorter and simpler system in a Model Y. Every extra fastener is an extra point of possible failure, and all the extra hoses mean that a Mach E hauls around extra mass in the form of extra coolant. The punchline was when Sandy Munro said "this is the second-best car we have seen after a Tesla." In other words, every other BEV is worse.

        Tesla has relentlessly automated their operations, and streamlined their designs, to the point where it takes a Tesla factory 10 hours to build a Model 3. VW takes over 30 hours to build their BEVs. VW has a total of 12 factories in Europe, and collectively those factories can build 1.9 million cars per year; Tesla built a single "gigafactory" in Germany that, once fully built-out, will be able to make over 2 million cars per year. This could be as soon as two years from now.

        Tesla has contracts with major battery suppliers, bought battery companies to get their technology and people, built their own battery factories, and has long-term contract with raw materials suppliers.

        Tesla doesn't have a dealer network and spends $0 per car on advertising. The legacy car companies have to charge a couple thousand dollars extra per car to recoup these two costs.

        So put it all together. Tesla builds the cars faster than anyone else, for less money, and sells at a higher profit margin. Tesla already has better deals on batteries than anyone else, and is building out their own battery factories. So how is another company going to beat Tesla at their own game?

        If legacy car companies want to sell BEVs against Tesla, they have to sell a worse product, they have to meet or beat Tesla's price which probably means they have to sell at a loss, and they need to find a supply of battery cells from somewhere. How many cars can a legacy company afford to sell at a loss? How many can they even build? GM's CEO Mary Barra has promised that by 2026, GM will be able to build 1 million BEVs per year; Tesla already built almost a million cars in 2021, and by 2026 could literally be building four million cars per year.

        As for self-driving, look at the YouTube videos showi

    • > doing stupid stuff for the authoritarian nationalist mob

      Yes, the free speech people are the authoritarians and the political censors are the libertarians. :rolleyes:

    • by gtall ( 79522 )

      I doubt Musk even knows who Warren is. Admittedly, she's dingbat, but not one anyone on the right takes seriously. . .unless. . .maybe she is involved in baby sales. You should look into that.

  • How can it be legal for a company to offer shares to a certain class of current shareholders at a lower price than others or non-shareholders? I'm sure if Elon really wanted to, he could bankrupt Twitter in court challenging this, and even if he doesn't win, he would still have enough to purchase Twitter.
    • Re:Legality of this? (Score:5, Informative)

      by BeerFartMoron ( 624900 ) on Friday April 15, 2022 @12:05PM (#62449810)

      It's a bit of an open question, but the relevant case law (so far) is Moran v. Household International, Inc. [wikipedia.org]

      Moran v. Household International, Inc., 500 A.2d 1346 (Del. 1985) is a decision of the Delaware Supreme Court that upheld a shareholder rights plan (also known as a "poison pill") as a legitimate exercise of business judgment by Household International's board of directors. Moran is significant as the first case in which a U.S. state court upheld a shareholder rights plan.

      The Delaware Supreme Court upheld the lower court's ruling.

  • by Deathlizard ( 115856 ) on Friday April 15, 2022 @12:03PM (#62449794) Homepage Journal

    Remember when Microsoft tried to buy Yahoo, and Yahoo Shareholders listened to their board and said no instead of taking a no-brainer overinflated cash offer given to them by a probably drunk Steve Ballmer?

    Remember how they all got screwed with shares not even worth 10% of the value MS put on the company when Verizon bought Yahoo's corpse 9 years later?

    Do you honestly see your share worth more 9 years from now than what is being offered today?

    While you're thinking about that, Remember that Vine idea that Twitter bought and killed some years ago that some Chinese company cloned and is now dominating social media with?

  • Seems to me Twitter as an organization is poisoning itself. But then, social media is already, poison for the human soul.
  • by schwit1 ( 797399 ) on Friday April 15, 2022 @12:06PM (#62449812)

    Antonio García Martínez (agm.eth)@antoniogm
      It's fascinating the outcry at the thought of Elon buying Twitter: We don't want this guy with the wrong values running the public square!
      Meanwhile one of the biggest Twitter shareholders is....Saudi Arabia.

    @elonmusk Replying to @Alwaleed_Talal @Twitter and @Kingdom_KHC
      Interesting. Just two questions, if I may.

      How much of Twitter does the Kingdom own, directly & indirectly?
      What are the Kingdom’s views on journalistic freedom of speech?

    • Antonio García Martínez (agm.eth)@antoniogm

      It's fascinating the outcry at the thought of Elon buying Twitter: We don't want this guy with the wrong values running the public square!

      Meanwhile one of the biggest Twitter shareholders is....Saudi Arabia.

      @elonmusk Replying to @Alwaleed_Talal @Twitter and @Kingdom_KHC

      Interesting. Just two questions, if I may.

      How much of Twitter does the Kingdom own, directly & indirectly?

      What are the Kingdom’s views on journalistic freedom of speech?

      Alwaleed bin Talal owns about 5.2% of Twitter [aljazeera.com]

      Which is slightly less than what he owned of News Corp (ie, Fox News) [observer.com].

      So... just how much emphasis do you want to put on the influence of a ~5% owner of a news or social media company?

      • So... just how much emphasis do you want to put on the influence of a ~5% owner of a news or social media company?

        Maybe about ~5% emphasis? Which is pretty significant.

  • There is absolutely zero chance of musk pulling this off.
    There is no way they would hand over such a massive propaganda tool. I think the goal here is merely to make them squirm.

  • I SOOO wish Musk would consider forcing them to take that pill. Not wise, I know. And not gonna happen. But one can dream, right?

  • you don't know who to cheer for, but you know you should get away from both.
  • Bid still stands. Accept or refuse are the options, whatever you do.
    Meanwhile options go wild I guess.

    Sir Musk can cause this kind of upstir wherever he wants.
    I did not intend to use the word upstir in any negative connotation.
  • by kaatochacha ( 651922 ) on Friday April 15, 2022 @01:24PM (#62450082)
    The problem I have with this, and with most large tech organizations, is that they recently spent and excessive amount of time trying to convince everyone that they don't actually hold that much power, it's limited, they don't need to be overseen by the government. Then someone like Musk rolls in and trolls them, and suddenly everyone's shouting "but it will give him SO MUCH POWER!". You can't have it both ways.
  • by cheesybagel ( 670288 ) on Friday April 15, 2022 @01:35PM (#62450118)

    We are now in a commodities rally. Tech stocks are probably going to drop off a cliff even more than they have.
    If I was him I would just use that money and make my own Twitter.

  • by argStyopa ( 232550 ) on Friday April 15, 2022 @07:02PM (#62450936) Journal

    ...what does it mean that a company would rather self-immolate than let an outsider buy it.

    Elon Musk is hardly right wing (what's his kid's name again, A12?) *but* he also isn't assertively woke.

    It's not that someone antithetical to their ideals wants to buy them, it's someone who's not deeply dogmatic in precisely the same way.

    Tell me again how important they feel their control is of this medium? THAT ALONE should compel the Fed to investigate...except that the current administration are complete fellow-travelers to the Twitterbois.

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