Twitter’s board of directors takes countermeasures against Elon Musk’s takeover bid, now defined as hostile. The Tesla tycoon offered $ 43 billion to take the social network off the market and become its sole owner.
–
–
–
The board of directors unanimously adopted a “shareholder rights plan” of limited duration (expiring on April 14, 2023). The plan is intended to enable all shareholders to realize the full value of their investment in Twitter and will reduce the likelihood of any entity, person or group gaining control of Twitter by accumulating shares on the open market without paying all shareholders an adequate control premium or without providing sufficient time for the board to make informed decisions and take actions that are in the best interests of shareholders.
–
–
–
–
–
–
The plan is triggered when a member rises to 15% –
The Rights Plan, Twitter explains, does not prevent the board from engaging with the parties or accepting a proposed acquisition if it is believed to be in the best interests of the company and its shareholders. The plan adopted is similar to other plans adopted by listed companies in comparable circumstances.
The rights (the option to purchase newly issued shares), explains Twitter, “will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of the outstanding common stock in an unapproved transaction. from the board of directors In practice, if someone gets into the shareholder structure without asking for permission, as Elon Musk is actually doing.
In the event that the rights become exercisable due to the threshold being exceeded, each right will give its holder the opportunity to purchase, at the current exercise price, additional ordinary shares with a current market value equal to double the exercise price of the right. . But, and here is the poison pill, this procedure cannot be performed by the one who triggered the “poison pill”.
What is a “poison pill” –
A poison pill is a defense technique against a hostile takeover bid. It is the weapon, legal, in the hands of the management of a company that would like to discourage the “climber”. These are usually corporate mechanisms that aim to increase the cost necessary to acquire control of the company. Among these are the capital increase, through which a quantity of shares is offered at a favorable price to existing shareholders and which actually increases the number of shares in circulation.
–
