In most cases, news that a company could be bought out at a price higher than its market value sends investors into a buying frenzy that rackets up the company’s share price. But that wasn’t exactly the case for Twitter on Thursday.
The company’s stock fell almost 2% during regular trading on the day that Elon Musk offered to buy the social media platform for $43 billion—roughly $7 billion more than its current market valuation.
The lack of support from investors is one of the reasons Wall Street analysts are skeptical that Twitter’s board of directors would accept the offer. It could be a sign that investors are underwhelmed with Musk’s bid, particularly over concerns as to how he would finance it. By Thursday afternoon, a flurry of investment firms began advising clients to sell their Twitter shares.
Those concerns rang true Friday morning, when Twitter unanimously adopted a type of shareholder rights plan often referred to as a “poison pill,” aimed at making it harder for Musk to take over the company. The defense tactic allows shareholders to acquire more shares of the company at a relatively inexpensive price, effectively diluting Musk’s stake if he were to acquire more than 15% of the company. But that won’t necessarily stop Musk. The company’s board of directors could still approve Musk’s purchase—likely at a higher premium.
Read More: ‘The Idea Exposes His Naiveté.’ Twitter Employees On Why Elon Musk Is Wrong About Free Speech
As Twitter’s board mulls over how to proceed, TIME reached out to several analysts and investment firms about the decision-making process. Most agreed that Musk’s offer of $54.20 a share was too low considering the company’s closing price was $73.34 just a year ago. An offer closer to $60 a share would be more…
Source : time
