THE VILLAGES, Fla. – After Twitter dropped a major roadblock in front of Elon Musk’s effort to take over the company, Gov. Ron DeSantis announced Tuesday that Florida — an investor in Twitter through the state’s pension fund — is looking into what action it can take against the board of directors.
DeSantis said the social media company’s choice to adopt a “poison pill” defense that makes it difficult for Musk or any other investor to buy Twitter without the board of directors’ approval amounted to a political decision and not a smart business move.
WATCH: Gov. DeSantis wants to hold Twitter's board and directors accountable for potentially injuring Florida's pension fund.
— Election Wizard (@ElectionWiz) April 19, 2022
Musk’s offer of $43 billion — or $54.20 per share — was about 20% higher than the $45.08 closing price the day he made the offer. Shares of Twitter closed Monday up 7.5% at $48.45, still $5.75 shy of Musk’s offer. That’s a sign that investors are skeptical of whether Musk can pull off the deal.
DeSantis questioned the business decision to reject an offer 20% over the current stock value, but Al Waleed bin Talal, a Saudi prince who is among Twitter’s major shareholders, scoffed at the offer, saying said he didn’t believe $43 billion is close to Twitter’s value given its growth prospects. Twitter shares hit an all-time high of $77.63 in March 2021.
During a news confernece Tuesday in The Villages, DeSantis said, for now, lawyers are reviewing what the state might be able to do to hold the Twitter board of directors “accountable for breaching their fiduciary duty.”
“I don’t want to expend resources just to kind of be able to send out a press release or something. I mean, we really want to feel like we have a solid theory to be able to win,” DeSantis said. “But I can tell you just looking at it, most of the time the people I talk to would say if you’re on the board in that situation, you really do need to sell. It’s a massive return for your shareholders. I mean, most people and their investment vehicles are not making 20% in a year.”
DeSantis argued that the motivation was political rather than financial.
“They rejected it because they know they can’t control Elon Musk,” DeSantis said. “They know that he will not accept the narrative and that their little play toy of Twitter, it would not be used to enforce orthodoxy, and to basically prop up the regime and these failed legacy media outlets. And so that’s why they did it. It was not, in my judgment, because it wasn’t a good business deal.”
This wouldn’t be the first time Florida has taken on big tech. The state passed a big tech accountability and transparency bill last year that the tech companies sued over, and that issue is currently moving through the courts.
“They advertise as being open platforms. They advertise as you being able to express yourself and communicate with other people, and yet, their censorship decisions and deplatforming decisions are based on viewpoint discrimination,” DeSantis argued.
With the takeover bid, Twitter’s next likely move is to formally reject Musk’s offer, although it could negotiate. Musk has a number of options which also include talks with the board, sweetening his offer, or even triggering the poison pill, which experts say would be disastrous for the company.
In a regulatory filing on Monday, Twitter’s board said it approved the defensive move to protect the company from “coercive or otherwise unfair” takeover tactics.
The board is leaving open the possibility of negotiating with Musk or another suitor. The filing says the shareholder rights agreement should not interfere with any merger or offer approved by the board.
When he made his offer public, Musk provided no details on financing, but such a disclosure could improve his chances. He could raise money by borrowing billions using his stakes in Tesla and SpaceX as collateral, and he could bring in other investors.
The poison pill would give stockholders as of April 25 the right to buy one one-thousandth of a share of preferred stock for each common share they own, at a price of $210. The rights are triggered if any person or group of investors buys 15% or more of the company’s shares without board approval.
The preferred stock would have the same voting rights as a common share, according to the filing, which does not specifically mention Musk.
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