Poison Pill 💊

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Poison Pill

Last week we discussed how Elon Musk joined on to Twitter, purchasing a near 10% stake in the company to become the largest shareholder only to not join the companies board of directors. Since then, Musk has made another major move, offering to outright purchase the company at $54.20 per share in cash. Twitter’s response has been that they will review his offer which values the company at around $43 billion. The news broke when Musk tweeted: “… I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced”. “My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder”. In a sense the move has an undertone of blackmail or negotiation pressure – depending on how you look at it. Twitter’s also been taking some actions against Elon, and it appears they don’t seem to be interested in handing the entire company over, at least along the lines Elon is drawing. This is evidenced by Twitter’s board voting unanimously to adopt a “Poison Pill Strategy” – which gives existing shareholders the option to buy more shares at a lower price, effectively diluting a new hostile party’s ownership stake. In this case, Musk would be the hostile party. Under the new structure, if any party acquires at least 15% of Twitter’s outstanding stock without Board approval, other shareholders will be granted the rights to purchase additional shares at a discounted price. What do you think of Musk’s and Twitter’s series of back and forths, and how do you think this will all play out?

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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