“Even though Musk wouldn’t be able to close his tender offer, even with a majority of shares tendered, given the poison pill and other impediments, it’s a ‘put your money where your mouth is’ type move and shows he really wants to buy this company,” Freedman said.
Musk could simultaneously launch a proxy contest where he would ask shareholders to withhold their votes for the two directors who will stand for re-election at this year’s annual meeting, which is slated for May 25, Freedman said. That would serve as a referendum on his offer, and also allow him to solicit votes for an amendment to the company’s charter to declassify the board, meaning that all directors would stand for election each year rather than just a few, he added. Last year, a similar proposal almost achieved the 80% vote threshold required to change the company’s bylaws, he noted.
If Musk doesn’t act in the next few months, he won’t be able to do much at Twitter until next year’s annual general meeting because the company doesn’t allow for shareholders to call a special meeting or act by written consent. Freedman noted that both Twitter Chief Executive Officer Parag Agrawal and Chairman Bret Taylor will stand for re-election next year. Dorsey is scheduled to leave the board once his term expires at the next shareholder meeting.
If Musk “can get fairly widespread support this year, it also could force the company’s hand to negotiate with Musk earlier than they would like to or announce and run a sale process. All to avoid facing the music next year,” he said.
--With assistance from Sean O'Kane.
This article was provided by Bloomberg News.