Trash Talking Elon Musk's Bid For Twittered Scuppered By Poison Bill

Twitter has rebuffed Elon Musk’s takeover bid with a so-called poison pill that would flood the market with new shares if he buys 15% of its stock even as another hedge fund with a far greater stake in Twitter than Musk said it would be open to acquiring the social media company, the New York Times reported.

Photo Insert: It turns out another entity holds a bigger stake in Twitter than Musk.

In this case, the strategy would flood the market with new shares if Musk, who currently owns more than 9 percent of Twitter, bought 15 percent or more — reducing his stake and making it significantly more difficult to buy up a sizable portion of the company. It turns out another entity holds a bigger stake in Twitter than Musk.

The goal is to force anyone trying to acquire the company to negotiate directly with the board. Investors rarely try to break through a poison pill threshold, according to securities experts.

Greg Roumeliotis and Krystal Hu of Reuters reported that a buyout firm has emerged to challenge Musk’s $43 billion bid for Twitter. Thoma Bravo, a technology-focused private equity firm that had more than $103 billion in assets under management as of the end of December, has informed Twitter that it is exploring the possibility of putting together a bid, people familiar with the matter said.

Twitter said on Friday it adopted a poison pill that would dilute anyone amassing a stake in the company of more than 15% by selling more shares to other shareholders at a discount. Known formally as a shareholder rights plan, the poison pill will be in place for 364 days.

Thoma Bravo's interest raises the specter of more private equity firms vying for Twitter. The global private equity industry is sitting on about $1.8 trillion in dry powder, according to data provider Preqin. Most buyout firms would not face antitrust restrictions in acquiring Twitter.

Musk's criticism of Twitter's reliance on advertising for most of its revenue has made some private equity firms apprehensive about Musk’s ignorant prattle about killing Twitter’s main revenue stream.

Twitter has more than $6 billion of cash on its balance sheet and its annual cash flow is close to $700 million, providing some comfort to banks considering whether should provide debt for a deal.

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