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How Twitter wants to prevent the takeover by Elon Musk with a "poison pill".
STORY: Twitter is using a so-called "poison pill" to defend itself against a takeover by Tesla boss Elon Musk. The US group announced on Friday that it was launching a frequently used procedure that is intended to make it difficult for large investors to increase their stake. The regulation should apply for one year and take effect if someone gains control of 15 percent or more of the shares without the consent of the group's management. Musk currently controls a good nine percent of Twitter shares. According to Forbes, Musk is the richest man in the world at $265 billion. He wants to buy and delist Twitter for $41.4 billion. This should enable the service to realize its potential as a "platform for free speech around the world," according to Elon Musk.
The short message service Twitter is fighting a takeover by tech billionaire Elon Musk. The online service strengthened the rights of current shareholders on Friday.
The online service Twitter is defending itself against the attempted hostile takeover by the technology entrepreneur Elon Musk. The board of directors approved a plan that strengthens the rights of current shareholders, the US company announced on Friday. Musk, who recently joined Twitter as a major shareholder, is making it more difficult for him to buy up the rest of the company's shares.
The plan is said to allow shareholders to purchase additional shares at a lower price. It is also planned that in the event of a possible takeover of the company through the large-scale purchase of shares, the buyer will have to pay a so-called control premium to the other shareholders. This is a contribution that is above the market value of the shares.
Elon Musk warns Twitter of consequences
The approved plan will reduce the likelihood that "any institution, person or group" will gain control of the company through the acquisition of shares on the open market without paying a "reasonable control premium" to all shareholders, Twitter said.
The plan is said to come into effect if an investor buys more than 15 percent of the company's shares without board approval. Musk currently holds about 9 percent. Musk didn't comment directly on the board's plans. However, he warned on Twitter that the board of directors would face "gigantic" legal liability if they rejected Musk's offer against the interests of shareholders.
Analyst Dan Ives said the company's management's move "is not viewed positively by shareholders." On the one hand there is a threat of a dilution of the shares, but also a general signal of hostility towards a takeover of the company. He called a court challenge to the plan "likely."
PayPal, Tesla, SpaceX
Musk, the founder of the electric car manufacturer Tesla and the space company SpaceX, had announced the previous day that he wanted to buy all remaining Twitter shares at a price of 54.20 dollars (49.69 euros) after becoming a major shareholder in Twitter. Musk put the value of Twitter at around $43 billion.
Musk with doubts
However, the star entrepreneur admitted on Thursday that he was "not sure" that he would succeed in taking over Twitter. It is questionable how he intends to finance the business, since his capital is mainly tied up in shares in his own companies.
Some investors had also spoken out against the proposal, including Saudi Prince Alwaleed bin Talal. Morningstar Research analysts said "the probability that Twitter will accept the offer is probably less than 50 percent".
The question is also how Musk would run the platform after an acquisition. While he advocates transparency in the algorithm that controls the display of posts and the greatest possible freedom of expression, others fear for social cohesion if Twitter again allows controversial expressions of opinion such as that of the banned ex-US President Donald Trump.