Elon Musk has offered $43 billion to buy Twitter but the Twitter board have responded by announcing a “shareholder rights plan”. This should rather be called a “management rights plan” because it’s what is called a “poison pill” defence which allows the board of the company to defend against any hostile bid by permitting them to issue so many new shares at a big discount that the bidder is diluted and unable to gain control.
This is in my view unethical and unprincipled. Irrespective of your views on Twitter or on Elon Musk, the adoption of a poison pill is effectively a frustration of shareholder democracy.
There is a hint that Mr Musk would limit the amount of censorship that Twitter applies to posts. For example Donald Trump has been permanently suspended from Twitter for comments that Twitter judged to be an incentive to violence. You can read their judgement here: https://blog.twitter.com/en_us/topics/company/2020/suspension . It hardly appears to be a fair and unbiased view.
It’s not just Donald Trump that faces the wrath of the Twitter censors. For example news aggregator Politics For All (PFA) was banned for “distorting stories by focusing on specifics that would go viral”. Is that not what all news media do?
Free speech is an important constitutional right in the USA and when such a dominant medium such as Twitter chooses to interfere in politics or for commercial reasons then it needs to be censured. So Elon Musk might just be a better owner that the existing Twitter management.
The other issue is that the board of Twitter may simply be defending their well-paid jobs by trying to block a takeover. I hope they lose this battle.
Poison pill defences are of course not permitted in the UK under Takeover Panel rules. It is unfortunate that they are not outlawed in the USA.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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