Twitter shares rise 4% as Musk keeps up his barrage by tweet

The social media company launched a so-called poison pill defence to thwart Musk's unsolicited bid

Elon Musk has been actively posting on his Twitter account in what appears to be a social media campaign to sway public opinion in favour of his bid.

Mon, 18 Apr, 2022 - 18:02

Molly Schuetz

Twitter shares gained on Monday after the social media company launched a so-called poison pill defence to thwart an unsolicited bid by Elon Musk to take the company private for $43bn (€39.7bn), or $54.20 a share.

A securities filing has confirmed the defence strategy Twitter outlined last week, which would allow the company to issue new stock that all shareholders except Mr Musk would be able to buy at a discounted price. It imposes a “significant penalty” on any person or entity that would acquire more than 15% of the company without board approval, according to the filing. Mr Musk currently owns just over 9% of Twitter shares.

Since making the offer last week, valuing the company at $43bn, Mr Musk has been actively posting on his Twitter account in what appears to be a social media campaign to sway public opinion in favour of his bid.

The billionaire also floated a cryptic tweet with the word “tender”, a likely wink-and-nod reference to a potential tender offer, as well as tweeting that any Twitter board under his ownership wouldn't be paid any fees.

Poison pill defence

Twitter gained 4% to just over $47. Twitter is using the poison pill defence in order to buy time to come up with a plan that would be in the best interests of its shareholders.

The company has also been fielding takeover interest from other parties, including tech-focused private equity firm Thoma Bravo, according to a person familiar with the matter. Private equity firm Silver Lake, which already owns a significant stake in Twitter, also would make sense as a partner since it has an existing relationship with Mr Musk as well, but it’s unclear if they’re interested.

Meanwhile, Mr Musk may try to partner with Oracle, given that its co-founder Larry Ellison is on Tesla’s board and that Oracle has previously shown interest in taking a stake in TikTok, another popular social media company, according to Bloomberg Intelligence analysts.

Mr Musk, for his part, has said that any rejection of his bid would cause him to re-evaluate his stake in Twitter. Over the weekend, Mr Musk tweeted that the economic interests of Twitter’s board aren’t aligned with shareholders.

Tesla pays its own directors an annual cash retainer of about $20,000 plus certain additional fees, but they also each receive stock option grants every few years, meaning they stand to make tens of millions of dollars or more with Tesla’s stock price gains.

Twitter’s board is “in a tough spot — the validity of Mr Musk’s bid remains uncertain and accepting a bid below the 52-week high of $73 is difficult”, Wells Fargo Securities analyst Brian Fitzgerald wrote in a note to investors.