Twitter said Friday that its board of directors has unanimously adopted a “poison pill” defence in response to Tesla CEO Elon Musk’s proposal to buy the company for more than $43 billion US and take it private.
The move would allow existing Twitter shareholders — except for Musk — to buy additional shares at a discount, thereby diluting Musk’s stake in the company and making it harder for him to corral a majority of shareholder votes in favour of the acquisition.
Twitter’s plan would take effect if Musk’s roughly nine per cent stake grows to 15 per cent or more.
The poison pill injects another twist into a melodrama surrounding the possibility of the world’s richest person taking over a social media platform he described Thursday as the world’s “de facto town square.”
Twitter said its plan would reduce the likelihood that any one person can gain control of the company without either paying shareholders a premium or giving the board more time to evaluate an offer. Such defences, formally called shareholder rights plans, are used to prevent the hostile takeover of a corporation by making any acquisition prohibitively expensive for the bidder.
WATCH | Elon Musk moves to buy Twitter in hostile takeover:
Elon Musk makes $43B offer to buy Twitter in hostile takeover
1 day ago
Duration 1:58
To the surprise of many, Elon Musk offered to buy Twitter in a deal worth more than $43 billion US. Musk explained his offer was about ‘the future of civilization,’ during an appearance in Vancouver. 1:58
Even if it discourages his takeover attempt, Musk could still take over the company by waging a “proxy fight” in which shareholders vote to retain or dismiss the company’s current directors. Twitter said its plan doesn’t prevent the board from negotiating or accepting an acquisition proposal if it’s in the company’s best interests.
“They’re gearing up for a battle here with Musk,” said Daniel Ives, an analyst for Wedbush Securities. “They also have to give themselves time to try to find another potential buyer.”
Musk has offered to buy the company outright for more than $43 billion US, saying it “needs to be transformed as a private company” in order to build trust with its users and do better at serving what he calls the “societal imperative” of free speech.
“Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said during an onstage interview at the 2022 TED conference Thursday in Vancouver, just hours after his bid was announced.
With about 82 million Twitter followers, Musk is both a prolific user of the platform and a vocal critic of the measures it has taken to restrict accounts that spread misinformation or amplify violent rhetoric and hate speech. He said Thursday he’s opposed to permanent user bans — the most famous of which is Twitter’s suspension of former President Donald Trump’s account after the Jan. 6 Capitol riot.
TED CEO Chris Anderson, left, interviews Elon Musk during the last TED 2022 session in Vancouver on Thursday. (Stacie McChesney/TED )
Musk revealed in recent regulatory filings that he’d been buying Twitter shares in almost daily batches starting Jan. 31, ending up with a stake of about nine per cent. Only Vanguard Group controls more Twitter shares. A lawsuit filed Tuesday in New York federal court alleged that Musk illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.
After Musk announced his stake, Twitter quickly offered him a seat on its board on the condition that he would limit his purchases to no more than 14.9 per cent of the company’s outstanding stock. But the company said five days later that Musk had declined.
Ives said Twitter’s poison pill path is a predictable defensive maneuver but could be seen as a “sign of weakness” for the company on Wall Street.
Musk could try to fight the measure in court, but “no court has overturned a poison pill in the last 30 years,” said Columbia University law professor John Coffee. Rallying shareholders to kick out the board might be more doable but also presents challenges to Musk, Coffee said.
Resistance to Musk’s offer
Musk’s offer already faced resistance before Twitter threw its Friday counterpunch.
A Saudi prince who is among Twitter’s major shareholders scoffed at Musk’s offer in a Thursday tweet. Al Waleed bin Talal said he would reject Musk’s overtures because he didn’t believe $43 billion US “comes close to the intrinsic value of Twitter, given its growth prospects.” The prince punctuated the tweet with another one from 2015 disclosing his Kingdom Company had raised its stake in Twitter to 5.2 per cent — about half of what Musk now holds.
While Musk’s $54.20 US per-share offer is nearly 40 per cent greater than Twitter’s stock price before he disclosed his huge investment, it’s still far below the peak closing price of $77.63 US reached less than 14 months ago. At that time, Twitter was valued at about $62 billion US.
Twitter headquarters is seen in San Francisco on Jan. 11. (Stephen Lam/Reuters)
Musk responded to the prince with a tweet asking how many Twitter shares he holds and then made what may have been a veiled reference to the 2018 murder of journalist Jamal Khashoggi that was tied to Saudi Arabia’s Crown Prince Mohammed bin Salman. “What are the Kingdom’s views on journalistic freedom of speech?” Musk asked in a Thursday tweet.
In a sign that investors are skeptical about Musk’s offer, Twitter’s stock fell in the first day of trading after the takeover bid was announced Thursday — exactly the opposite of what an approving market reaction looks like. The stock markets were closed Friday for the Good Friday holiday. Twitter said it plans to disclose more details of its shareholder plan in an upcoming regulatory filing.
Another outspoken billionaire, Dallas Mavericks owner and tech investor Mark Cuban, weighed in on Twitter to share his theory that Musk is making his bid to goose the company’s stock price so he can sell his stake at a profit. Using a profane term, Cuban also postulated Musk is using the bid to torment the U.S. Securities and Exchange Commission, the stock market regulatory agency that fined Musk $20 million US in 2018 after he tweeted about a potential buyout of Tesla that never materialized.
In Thursday’s TED event, Musk made it clear he is still incensed with the SEC and cursed the regulators with a profanity.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
