BREAKING: Twitter’s Board Refused to Allow Shareholders to Vote on Elon Musk’s Buyout — May Now Be Sued
Twitter’s Board of Directors is blocking the company’s shareholders from voting on Elon Musk’s buyout offer. The Twitter board is *refusing* to […] More
Twitter’s Board Refused to Allow Shareholders to Vote on Elon Musk’s Buyout — May Now Be Sued
by Kyle Becker
Twitter’s Board of Directors is blocking the company’s shareholders from voting on Elon Musk’s buyout offer.
“The Twitter board is *refusing* to allow the shareholders of the company vote Yes or No on Elon’s offer,” Jack Posobiec commented.
“Twitter must allow the shareholders to vote on Elon’s offer! Democracy!” Jack Posobiec noted. “#LetThemVote trend it,” he added.
“Twitter’s board is now in breach of their fiduciary duty and as one of their largest shareholders, @elonmusk can and should sue them,” he added. “And every other shareholder. Titanic liability.”
“Elon: I offer you 38% premium. Shareholders: Let’s vote. Twitter Board or Directors: No vote. Shareholders: Huh? Twitter Board: We will sell ourselves stock at a deep discount if Elon keeps buying stock. This is what democracy looks like,” Cernovich snarked.
“Twitter, Let them vote!” he added.
“Instead of accepting Elon’s premium to the share price, Twitter’s board is planning to dilute the company by giving insiders a sweetheart deal,” David Sacks noted. “This is a blatant violation of fiduciary duty and should be illegal.”
“This poison pill (defensive measure to prevent a takeover) isn’t just any poison pill,” Kip Herriage noted. “It’s the regime of the elite ruling class protecting one of their primary tools for indoctrination propaganda.”
“Board members should be sued ‘personally’ for BLATANT failure of fiduciary duty,” he added.
“Twitter’s insiders essentially just decided to screw over their shareholders, crash their stock, and open the company up to massive lawsuits just to prevent Elon Musk from running Twitter in a way that won’t rig elections or censor their political opponents,” Greg Price remarked.
“Twitter’s Board of Directors & this #poisonpill is in breach of fiduciary responsibility to shareholders,” Adam Rizzieri remarked. “2021: the company posted a $221 Million LOSS. 2022: @elonmusk’s involvement offered them a chance to go from being valued at $13.3 Billion to cashing out at $43 Bn.”
Elon Musk earlier commented on the “utterly indefensible” position of not putting his offer up to a shareholder vote.
“Absolutely,” Musk commented to a question from Nick Short. “It would be utterly indefensible not to put this offer to a shareholder vote. They own the company, not the board of directors.”
As earlier reported, Twitter’s Board of Directors has adopted a “poison pill” strategy to prevent Elon Musk from taking over the Big Tech platform and adopting free speech policies.
“Twitter, $TWTR announced that its Board of Directors has unanimously adopted a limited duration shareholder rights plan (the “Rights Plan”),” unusual whalesreported. “The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter.”
“Important: The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments,” the report added by citing the board’s statement.
Axios also reported that Twitter’s board is adopting the poison pill.
“Twitter’s board on Friday enacted a defensive measure meant to deter Elon Musk’s $43 billion hostile takeover bid,” Axios reported.
“Why it matters: The ‘poison pill,’ as it’s called in corporate terms, gives Twitter’s existing shareholders time to purchase additional shares at a discount, thus diluting Musk’s ownership stake,” the report added.
On Thursday, one of Twitter’s largest corporate shareholders, Vanguard Inc., upped its stake in the Big Tech giant to leap past Elon Musk as the largest single shareholder.
“Elon Musk is no longer the largest shareholder in Twitter, it emerged on Thursday, after asset manager Vanguard Group increased its stake to overtake him,” the Daily Mail reported. “Vanguard now owns 10.3 percent of Twitter, while Musk owns 9.1 percent of the company, making him the largest individual shareholder.”
Musk’s share is still four times that of the only other major individual shareholder in the company: Twitter founder Jack Dorsey.
According to Investopedia, Vanguard has more than $7.50 trillion in assets under management (AUM), second only to BlackRock, Inc ($9.01 trillion AUM), which also owns a large stake (6.5%) in Twitter.
Vanguard is the “largest issuer of mutual funds in the world and the second-largest issuer of exchange-traded funds (ETFs),” Investopedia also notes.
The Vanguard move is an obvious attempt to frustrate Musk’s attempt to take over Twitter and restore a semblance of free speech on the platform.
Twitter’s board held an emergency meeting on Thursday afternoon to evaluate Musk’s $43 billion offer, valued at $54.20/share. CEO Parag Agrawal spoke to shareholders at the meeting about the offer.
Major Twitter shareholder Saudi Sheikh Al Waleed rejected Elon Musk’s bid,which is significantly higher than the Goldman Sachs appraised target price of $30/share.
But Musk said at a TED conference on Thursday that there is a ‘Plan B.’
“Twitter has become kind of the de facto town square,” Musk said. “So it’s really important that people have both the reality and the perception that they’re able to speak freely… so there’s no sort of behind-the-scenes manipulation, either algorithmically or manually.”
“My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” Musk continued. “I don’t care about the economics at all.”
“I’m absolutely obsessed with truth,” Musk added.
Musk was asked about what would happen if the Twitter board denied his purchase offer. “Is there a plan B?” he was asked.
“There is,” Musk said during the TED appearance in Vancouver.
However, Musk acknowledged Thursday he is “not sure” if he’ll actually be able to buy Twitter outright. Twitter confirmed it had received his bid, but the board must still review his offer. Musk had underscored that the offer would be his “best and final” one.
Musk also made it clear that the reason he is moving to take over his Twitter is because he is a free speech absolutist who believes that it is necessary for the future of civilization.
“A good sign as to whether there is free speech: is someone you don’t like allowed to say something you don’t like?” he said on Thursday. “If that is the case, then we have free speech.”
Twitter’s board reportedly weighed the “poison pill” strategy to prevent Elon Musk from significantly increasing his stake in the company, the Wall Street Journalreported. This defensive strategy, also called a “shareholders rights plan,” complicates hostile takeovers and makes them more expensive for the buyer.
One “poison pill” strategy would allow existing shareholders to purchase additional shares at a discount, which would then effectively dilute the ownership stake of the hostile party.
However, Twitter’s board has a legal obligation to do what’s in the best interest of shareholders. If Twitter fails to do so, the company can be sued. After such a lawsuit, the stock will crash, and Twitter will be even more ripe for the hostile takeover. It’s a lose/lose proposition for Twitter.
Notice: This article may contain commentary that reflects the author’s opinion.