Twitter board not ready let Elon Musk buy the company no need to fight. Board members unanimously approved a fixed-term shareholder rights plan, which will be implemented in one year from today.
The right becomes effective if a single entity acquires at least 15% of Twitter’s outstanding common stock without board approval. If that is the case, certain shareholders will have the right to buy more shares. Flooding the market with new stocks to dilute other investors’ holdings is called poison strategy and it is designed to prevent hostile takeover efforts.
Musk quickly became Twitter’s biggest shareholder as it emerged that he’s been quietly embracing shares 9.2% in company. He was suggest a seat on the board of directors and if he accepts, he will not be allowed to build an ownership stake of more than 15%. Musk refuse board seat earlier this month, though. This week, Musk made an offer to buy the entire company for about $43 billion.
The company said in a press release that passing the rights plan would “reduce the ability of any organization, individual, or group to gain control of Twitter through open market accumulation without paying all shareholders an appropriate control fee.” may or may not provide the Board of Directors with sufficient time to make informed judgments and take actions in the best interest of shareholders.” In other words, the move would make it difficult for Musk to speak. offer buybacks directly to shareholders and repurchase their shares in a patchwork fashion.
Twitter said the plan is similar to one being implemented by other publicly traded companies that have been proposed for a non-binding acquisition. Notably, the rights plan does not prevent Twitter from accepting a buyback offer if it believes it is in the best interests of shareholders.
Musk stated in his acquisition offer that Twitter has “extraordinary potential” and that he will “unlock it”. In a TED talk just hours after making the proposal, Musk Debate that Twitter’s algorithm must be open source”, so anyone can see […] no kind of behind-the-scenes manipulation, algorithmic or manual. “He also suggested that he would be wrong on the less censorship aspect and expressed reservations about issuing permanent bans on users who break the rules.
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