The cute little Twitter bird has teeth. Today, the company announced it has poisoned the local watering hole, hoping it will stall Elon Musk as he seeks to swallow up the social media company in a hostile takeover.
The company board voted unanimously Friday to create a new “Rights Plan” that allows shareholders to buy additional shares at a discount should some party like, for instance, a relatively unknown internet troll named Elon Musk, decide to buy up 15% or more of the company shares. Musk currently owns around 9% of the company’s shares, and though he did have the largest share earlier this month, he has since been eclipsed by the Vanguard Group, a massive investment management company that owns 10% of the company. The Rights Plan lasts until April 14 next year.
It effectively means that Tesla CEO Musk has to negotiate directly with the board, rather than just snapping up stock with abandon and impunity. Rumors of such a move have been circulating online over the past few days. The board reportedly met yesterday evening to evaluate the Tesla CEO’s offer, all while Musk has trolled the company on its own social network.
In an interview yesterday during a live TED event, Musk offered a rather reductive view of the situation, saying “I don’t care about the economics at all.” The CEO of what remains the biggest EV vehicle company in the world has reportedly hired investment banking firm Morgan Stanley to advise on the takeover, but whether Musk has the funds necessary to close the deal remains an open question.
“I am not sure I will actually be able to acquire it,” he said during the TED Q&A, which, while great for Musk’s fans on Twitter who love watching him troll the rest of the world, does little to assure the U.S. Security and Exchange Commission, which he’s had issues with in the recent past (He called members of the agency “bastards” at TED). Former SEC Chair Harvey Pitt told Bloomberg that “I think it’s very hard to take anything Musk does seriously; he always has ulterior motives.”
Pitt added that by Musk saying that if he’s not allowed to buy the company he would need to “reconsider his position,” that Musk has created an overhang on the market, meaning that investors are less likely to buy shares. The former SEC chair also said that, “in all likelihood,” the board would reject Musk’s offer.
Now it all depends on whether holders are willing to share their toys with a man well-known for kicking sand in other kids’ faces. Saudi Arabian billionaire Prince Alawaleed bin Talal, a board member who owns a 4.45% stake in Twitter, posted a tweet rejecting Musk’s offer, saying that the proffered price of $54 a share doesn’t match Twitter’s “growth prospects.” Musk shot a tweet back, saying “What are the Kingdom’s views on journalistic freedom of speech?”
And all this action has not done any good deeds for Twitter’s stock, which yesterday closed at around $45 a share. The share price has improved somewhat with today’s news but is still down from an October 2021 high of $60. The rollercoaster of the last few weeks has not done anything to help Tesla’s stock price, either, as investors grapple with a leader dividing his time between three companies.
And it’s not just the people at the top feeling the weight of this purchase. The Washington Post reported that Twitter employees are feeling the pressure of what it could mean for Musk to control their jobs. Reuters put out a report that CEO Parag Agrawal tried to reassure employees during an all-hands meeting Thursday. Even still, was unable to answer questions about whether Musk’s definition of free speech matched their own.
Musk has said he wants Twitter to become more open, but has waffled back and forth on precisely what that means. He has proposed an edit button for tweets, but when pressed about the ethics and timing of the button, seemed to backtrack.