Twitter board reportedly considers poison pill, Elon Musk says co could be breaching fiduciary duty : Rashtra News
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Billionaire and Tesla CEO Elon Musk said Thursday that Twitter’s board would be breaching their fiduciary duty if they reject his $43 billion offer, a premium deal, and resort to a poison pill strategy. The outspoken chief executive’s comments came after the US media reported that Twitter’s board is considering a poison pill program, a plan that could protect the company from hostile acquisition bids, adding that it could announce it as soon as Friday. Experts are split on if Twitter would be going against their fiduciary duties by rejecting Musk’s offer or if the company should negotiate and ask for a better offer.
“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,” Musk said responding to a tweet critiquing the social media platform. Musk was replying to Cameron Winklevoss, an American bitcoin investor and Musk supporter, who said “Twitter would rather self-immolate than give up their censorship programs”. Musk even conducted a poll on Twitter asking his nearly 82 million followers if taking ‘Twitter private should be up to shareholders, not the board’. Over 80 percent of the pollsters agree with Musk so far.
Separately, Twitter CEO Parag Agrawal addressed Twitter employees on Thursday afternoon and said the company was not being “held hostage” by news of Elon Musk’s offer to buy the company, according to a Reuters report. The company’s board is continuing to review Musk’s offer, Agrawal said, adding that he was limited in what he could share with the employees.
Is Twitter undervalued?
Wedbush analyst Daniel Ives ,who has earlier anticipated that Musk’s rejection of Twitter could mean a Game of Thrones battle than a Cindrella story, said he thinks Twitter cannot reject Musk’s offer since it has fiduciary duties towards its shareholders.”This will put Twitter back against the wall. They have to accept it through a strategic process, but there really is no way that Twitter, in my opinion, could reject this. Ultimately from the fiduciary perspective he put such a premium here and he has the cash. Now the street will read this as Twitter going to get sold and ultimately Musk is going to buy it,” Ives told CNBC.
Twitter has hired Goldman Sachs as one of the advisers on the deal. Interestly in February, Goldman had given a price target of $37.83 for Twitter, which is nearly 30% lower than Musk’s “best and final’offer price. Oppenheimer’s Jason Helfstein told CNBC that at this time Elon Musk doesn’t need to offer more than $54 per share for Twitter.
Saudi Arabia’s Kingdom Holding Company (KHC), which is reportedly a 5.2 per cent stakeholder in Twitter, rejected Musk’s offer saying that the deal value does not come even close to the company’s intrinsic value. The chairman of KHC and Saudi Arabian Prince Alwaleed bin Talal said in a tweet, “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.”
Ross Gerber, co-founder at Gerber Kawasaki Wealth and Investment Management, said Twitter’s management needs a shakeup though Musk’s offer is to low. “I think any way this shakes out for Elon. It proves that twitter has lots of potential upside in improving their business. No doubt management change is necessary. But Elon should have created a vehicle for public shareholders too. The cash offer is way low,” Gerber said in a tweet. According to Bloomberg, Gerber owns more than 9,000 shares in the company.
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( News Source :Except for the headline, this story has not been edited by Rashtra News staff and is published from a www.financialexpress.com feed.)
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