As the Twitter board of directors weighs Tesla CEO Elon Musk’s bid to buy 100 percent of the company, the tech titan warned that in refusing it, board members would be breaching their fiduciary duty to shareholders.
“Twitter is considering a poison pill to thwart @elonmusk’s offer. They would rather self-immolate than give up their censorship programs. This shows you how deeply committed they are to Orwellian control of the narratives and global discourse. Scary,” Bitcoin investor Cameron Winklevoss tweeted Thursday.
In a response, Musk wrote: “If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty. The liability they would thereby assume would be titanic in scale.”
On Thursday, Musk offered to acquire Twitter at $54.20 a share, valuing the company at roughly $43 billion. The board reportedly spent the day deliberating whether to accept. After first buying a 9 percent stake in the social-media platform last week and agreeing to assume a seat on the board as the largest shareholder, Musk backtracked and rejected the board seat on Monday. He presumably grew frustrated with the limitations on his influence to shape content-moderation policy within Twitter’s staggered board structure, by which the company conducts director elections in different years, serving as a defense mechanism against a hostile takeover. As a member of Twitter’s board, Musk would have been technically barred from buying more than 15 percent of the company.
Musk’s move Thursday has been interpreted as a hostile takeover attempt by the members of Twitter’s board. He has argued that it is in the interest of Twitter’s shareholders for the board to take the deal, since Twitter’s stock is currently trading at $45.08, so his offer might therefore be viewed as a generous overvaluation. However, given that the stock was trading over $70 only recently, some Twitter board members have challenged this.
As of late Thursday, billionaire Saudi prince Alwaleed bin Talal Al Saud, a member of the Twitter board, denied Musk’s bid.
“I don’t believe that the proposed offer by @elonmusk ($54.20) comes close to the intrinsic value of @Twitter given its growth prospects. Being one of the largest & long-term shareholders of Twitter, @Kingdom_KHC & I reject this offer,” he tweeted.
To prevent Musk from owning Twitter, the board has another weapon in its arsenal: activating the poison pill, which it is currently considering, according to the New York Times. Through this strategy, the board could allow existing shareholders the right to purchase additional shares at a discount, effectively diluting Musk’s ownership interest and disincentivizing him from pursuing the takeover.
Since March, Musk had been seriously considering investor action after Twitter suspended satire site the Babylon Bee for allegedly violating its policy against “hateful” language by posting a comical headline calling transgender United States assistant secretary for health Rachel Levine its “Man of the Year.” In the immediate aftermath, Musk ran polls on Twitter asking users whether they believed the platform practiced and protected free speech.
Musk, who calls himself a free-speech absolutist, wrote in a letter to Bret Taylor, the chairman of Twitter’s board, on Wednesday: “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe. I believe free speech is a societal imperative for a functioning democracy.”