JAKARTA - Twitter's board of directors has issued a new "shareholder rights plan" to block Elon Musk's proposed purchase offer last week. The plan is a major setback for the Tesla owner's efforts to take full financial control of Twitter.
The plan was adopted "following an unsolicited and non-binding proposal to acquire Twitter." Twitter's board of directors stated this in a press release announcing the changes they made.
This maneuver, known in the financial world as the poison pill, was carried out to deter hostile takeovers by giving certain shareholders the right to buy more stock if outsiders tried to take control.
The plan strongly suggests that Twitter's board intends to fight Musk's bid to take ownership of the company, as previously reported. Twitter CEO Parag Agrawal has told employees that the company is still evaluating Musk's offer.
The board also detailed the plan in a filing with the US Securities and Exchange Commission (SEC), although the filing did not appear at the press meeting. However, the plan will remain in effect for one year.
On April 4, SEC filings revealed that Musk had amassed a 9 percent stake in Twitter, and had become the microblogging company's largest individual shareholder.
Musk then accepted the offer and abruptly stepped down from his seat on the company's board. As a board member, Musk will be limited to acquiring more than a 15 percent ownership stake. Then, yesterday, Musk submitted to the SEC his offer to take over the company in full.
Musk criticized the board's possible action against yesterday's deal, saying "it would be very untenable not to submit this offer to shareholder votes."
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Musk also said in the SEC filing in which he announced a hostile takeover bid for Twitter that he "needs to reconsider his position as a shareholder" if his bid to acquire is unsuccessful.
Musk has yet to articulate his plans for Twitter, but it is widely believed to involve easing the platform's moderation policies, which have been a source of conflict on Twitter in recent years.
In an interview at the TED conference in Vancouver, Musk said his main motivation was to maintain Twitter's position as a free speech platform. "Twitter has become something of a de facto town square," Musk told the crowd. “My strong intuitive feeling is that having a public platform that is maximally trustworthy and broadly inclusive is very important.”
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