Jack Dorsey has slammed the board of Twitter as he weighed into the toxic fight over Elon Musk’s attempted hostile takeover for the first time.
The former CEO, who is still a member of the board himself, blasted the ‘plots and coups’ that were ‘consistently the dysfunction of the company’.
In a series of bombshell tweets and replies, he endorsed one posting saying that ‘a bad board will kill a company every time’.
His comments come as Musk tweeted ‘Love Me Tender’ as he again teased at the possibility of a hostile takeover of Twitter.
The billionaire posted the Elvis Presley lyrics at the weekend in a potential bid to lure shareholders with a tender offer that could see him seize control.
A tender offer would see him bypass the board and go to shareholders with his offer of $54.20 a share – but he would need to show how he would finance his bid.
He also appeared to suggest he would strip board members of their salaries, saying they would get ‘$0 if my bid succeeds’.
Meanwhile the social media giant filed its ‘poison pill’ defense with the Securities and Exchange Commission in a bid to thwart the Tesla founder.
The plan is being seen as a last ditch attempt to prevent Musk from increasing his stake in the company further following his $43billion bid last week.
Musk, the world’s richest man, currently owns a 9.2 per cent stake in the tech giant and is trying to take it private with an unsolicited bid of $54.20 per share.
But bosses have reportedly brought on Goldman Sachs and JPMorgan Chase to advise it on how to respond to his bid.
Former CEO Dorsey slammed Twitter’s board of directors on as he replied to a series of unfriendly tweets
Elon Musk (pictured last week) has tweeted ‘Love Me Tender’ as he hinted at the possibility of a hostile takeover of Twitter
Elon Musk’s ‘Love Me Tender’ tweet hints at a tender offer.. but what does it mean?
Elon Musk’s Love Me Tender tweet appeared to hint at a tender offer to shareholders.
The 50-year-old simply tweeted on Saturday afternoon ‘Love Me Tender’ with musical notes around it.
A tender offer, also known as a hostile bid, would see him bypass the board and go straight to the shareholders with his offer of $54.20 a share.
But he would need to file a form with the SEC for this, meaning he would need to show how he would fund his bid.
It could pose as a problem for the Tesla billionaire, with it still unclear how he would pay for any deal to buy Twitter.
Former CEO Dorsey slammed Twitter’s board of directors on as he replied to a series of unfriendly tweets.
Replying to one post on Saturday, he said: ‘When I was fired in 2008 and made chair, the board took most of my shares away from me.
‘I also gave 1 per cent of the company back to the employee pool in 2015. So, ended up with very little of company.’
He also replied to one comment mentioning ‘plots and coups’ in the Twitter board saying: ‘it’s consistently been the dysfunction of the company’.
Earlier in the thread, he replied to a post quoting a ‘Silicon Valley proverb’ by venture capitalist Fred Destin.
It said: ‘Good boards don’t create good companies, but a bad board will kill a company every time.’ Dorsey said: ‘Big facts.’
The 45-year-old entrepreneur is still on the board but is expected to leave when his term comes to an end at the end of May.
Musk’s Love Me Tender tweet on Saturday afternoon was his latest hint he will bypass Twitter’s board and put his offer directly to shareholders.
On Thursday, following a TED talk appearance, he tweeted: ‘It would be utterly indefensible not to put this offer to a shareholder vote.’
He later added that the board’s ‘economic interests are simply not aligned with shareholders’.
This morning, in a raft of tweets, Musk slammed Twitter’s board, blasted those claiming his bid could not work and also praised an article in Bloomberg.
Managing Partner at The Future Fund Gary Black had tweeted: ‘Let me point out something obvious.
‘If @elonmusk takes $TWTR private, the TWTR board members don’t have jobs any more, which pays them $250K-$300K per year for what is a nice part-time job.’
Musk replied: ‘Board salary will be $0 if my bid succeeds, so that’s ~$3M/year saved right there.’
Another post on the social media website hit out at an article by NYU’s Professor Scott Galloway saying Musk could not afford to buy Twitter.
Twitter’s share price remained below Musk’s offer level of $54.20 last week, suggesting the market is uncertain whether his bid will be accepted by the board
Musk offered to purchase Twitter for $54.20 per share. The company’s stock was valued at the time of the offer at $45.85 per share
Musk replied: ‘Since he is consistently wrong, it should be possible to do quite well simply by doing the opposite of what he recommends.’
Meanwhile he also praised a piece written by Matthew Winkler for Bloomberg titled: ‘In Defense of Elon Musk’s Managerial Excellence.’
Musk posted simply: ‘Why, thank you, sir!’ The article said ‘Tesla CEO’s track record proves he’s a pre-eminent builder of businesses’.
The article goes on to say that the billionaire has a history of maximizing shareholder value.
It says: ‘Too often, Elon Musk makes the news for the wrong reasons, giving his detractors a steady stream of fodder to use against someone they say is little more than a self-absorbed corporate carnival barker.’
But it adds: ‘Musk’s success as a pre-eminent maximizer of shareholder value proves otherwise.’
Poison pill plans use the threat of dilution to dissuade takeovers
The Twitter board, meeting on Thursday afternoon, decided to combat Musk’s takeover bid with a so-called ‘poison pill’ provision that would prevent the Tesla CEO from increasing his stake in Twitter.
Also known as shareholder rights plans, poison pills typically trigger an automatic stock dilution through a flood of new shares if a corporate raider’s ownership stake grows too large.
For instance, if a single shareholder hits 15% ownership, a poison pill could be designed to allow every other shareholder to buy a new issue of shares at a discount.
Knowing such a plan could be triggered, raising the cost of a takeover astronomically, the bidder would be disinclined to pursue a takeover without the board’s approval.
In Twitter’s case, the idea of such a plan would be to prevent Musk from increasing his 9.1 percent stake in order to pressure the board to accept his deal.
Twitter on Monday filed its ‘poison pill’ plan with the SEC as it cemented its attempt to block Musk from executing the $43 billion hostile takeover.
The document says: ‘In connection with the adoption of the Rights Agreement, on April 15, 2022 the Board approved a Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock (the ”Certificate of Designation”) setting forth the rights, powers and preferences of the Preferred Stock.
‘The Certificate of Designation was filed with the Secretary of State of the State of Delaware on April 18, 2022.’
The strategy, announced on Friday, triggers a dilution of company shares if any shareholder builds up a 15 per cent stake without the board’s approval.
But it does not prevent Twitter from accepting Musk’s offer or entering negotiations with him or other potential buyers.
Yet it will stop the billionaire from putting pressure on the board by buying up ever more shares on the open market.
Twitter said its ‘poison pill’ plan is ‘similar to other plans adopted by publicly held companies in comparable circumstances’.
It said: ‘The Rights 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.’
It means if Musk or any other person or group acquires at least 15 per cent of Twitter’s stock, the ‘poison’ pill will be triggered.
Every other shareholder aside from Musk would be allowed to purchase new shares at half the market price, which stood at $45.08 at the closing bell on Thursday.
The flood of half-price shares would effectively dilute his ownership stake, making it massively more expensive for him to build up a controlling position.
Twitter said its board had voted unanimously in favor of the plan, which will remain in effect until April 14, 2023.
Its board is led by chairman Bret Taylor. Twitter CEO Parag Agrawal and co-founder Dorsey also hold board seats.
Rounding out the board are: MasterCard executive Mimi Alemayehou, private equity investor Egon Durban, karaoke tycoon Martha Lane Fox, former Google exec Omid Kordestani, Stanford professor Fei-Fei Li, venture capitalist Patrick Pichette, 1stDibs CEO David Rosenblatt, and former banker and diplomat Robert Zoellick.
Despite Twitter’s latest move, Musk could still defy the board and take over in a proxy fight by voting out the current directors – though this strategy could take years.
Musk previously responded to reports the board was mulling a ‘poison pill’ plan by tweeting: ‘If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty.’
Twitter’s board is led by chairman Bret Taylor, who is also the co-CEO of business software giant Salesforce
Twitter CEO Parag Agrawal (left) and co-founder Jack Dorsey (right) also hold board seats
If the board were to reject Musk’s tender offer, he could then approach the shareholders, who may accept the offer. Musk could also employ a proxy fight in which opposing groups of stockholders attempt to persuade other stockholders to let them use their shares’ proxy votes. Twitter’s San Francisco headquarters is pictured in July 2021
A Stanford professor, a banker and tech giants … who is on Twitter’s board?
- Chairman Bret Taylor
- CEO Parag Agrawal
- Co-founder Jack Dorsey
- MasterCard exec Mimi Alemayehou
- Private equity investor Egon Durban
- Karaoke tycoon Martha Lane Fox
- Ex-Google exec Omid Kordestani
- Stanford professor Fei-Fei Li
- Venture capitalist Patrick Pichette
- 1stDibs CEO David Rosenblatt
- Ex-banker Robert Zoellick
‘The liability they would thereby assume would be titanic in scale,’ he added, apparently referring to potential shareholder lawsuits.
Musk sent shockwaves through the tech world on Thursday with an unsolicited bid to buy the company.
He said the promotion of freedom of speech on Twitter as a key reason for what he called his ‘best and final offer’.
The world’s richest person offered $54.20 a share, which values the social media firm at some $43 billion, in a filing with the SEC on Thursday.
Musk said at a conference hours later he was ‘not sure’ he would succeed and acknowledged a ‘plan B’ but refused to elaborate.
But he hinted in a filing that a rejection would make him consider selling his shares.
Musk last week disclosed a purchase of 73.5million shares – or 9.2 percent – of Twitter’s common stock, which sent its shares soaring more than 25 per cent.
The board’s ‘rights plan’ kicks in if a buyer takes 15 per cent or more of Twitter’s outstanding common stock in a transaction not approved by the board.
Musk said he ‘could technically afford’ the buyout while offering no information on financing.
But he would likely need to borrow money or part with some of his mountain of Tesla or SpaceX shares.
Despite saying he wanted to take the company private, he said the firm would keep up to 2,000 investors – the maximum allowed.
Some investors have already spoken against the proposal, including businessman and Saudi Prince Alwaleed bin Talal.
Morningstar Research analysts echoed this, saying, ‘While the board will take the Tesla CEO’s offer into consideration, we believe the probability of Twitter accepting it is likely below 50 percent.’