After confirming the receipt of an unsolicited, non-binding proposal from Elon Musk to acquire all of Twitter, Inc. (NYSE: TWTR)’s outstanding common stock for $54.20 per share in cash on April, 14, the company announced on April, 15, that its Board of Directors has unanimously adopted a limited duration shareholder rights plan.
Musk’s offer values the company at $43.4 billion.
The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter. The plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.
The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders.
Under the Rights Plan, the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of Twitter’s outstanding common stock in a transaction not approved by the Board. In the event that the rights become exercisable due to the triggering ownership threshold being crossed, each right will entitle its holder (other than the person, entity or group triggering the Rights Plan, whose rights will become void and will not be exercisable) to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.
The Rights Plan will expire on April 14, 2023.
The company recently announced the results for the Fiscal Year 2021 with revenue was $5.08 billion, an increase of 37% year over year, and operating loss of $493 million, or an operating margin of -10%, which includes a one-time litigation-related net charge of $766 million1, as well as ongoing investments.
Adjusted operating income, which excludes the one-time litigation-related net charge, was $273 million reflecting an adjusted operating margin of 5%.