Why Twitter's Deal With Elliot Management Is Keeping It Afloat

Media

Published: March 9, 2020 2:03 pm

Twitter Inc. (NYSE: TWTR) was one of the few stock actually making a positive move on Monday, despite the markets selling off in one of the worst trading days since the financial crisis. Twitter’s move comes on positive news in regards to an activist firm and its issues with CEO Jack Dorsey.

Elliot Management and Silver Lake have come to an agreement with Twitter in which the firms will make a sizable investment in return for a couple board seats and a newly authorized share repurchase plan.

According to the agreement, Silver Lake will make a $1 billion investment in Twitter. Also, Twitter entered into a cooperation agreement with Elliot Management. Essentially, Twitter expects to use Silver Lake’s investment, along with cash on hand, to fund a $2 billion share repurchase program.

In connection with the investment and the Cooperation Agreement, Egon Durban, co-CEO and managing partner of Silver Lake and Jesse Cohn, partner at Elliott, will be appointed to the Twitter board of directors. In addition, the Twitter board will continue the process of identifying a third new independent director, focusing on candidates that reflect the diversity of the Twitter service and also possess deep technology and AI expertise.

Also for now, it seems, the Elliot Management has stopped its campaign against Jack Dorsey. This campaign became apparent earlier this year when Elliot disclosed its stake of roughly 4%. However, with these new board members, it seems Elliot Management has what it wants at least for now.

Jack Dorsey, co-founder and CEO, commented:

Twitter serves the public conversation, and our purpose has never been more important. Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward. They are one of the most respected voices in technology and finance and we are fortunate to have them as our new partner and as a member of our Board. We welcome the support of Egon and Jesse, and look forward to their positive contributions as we continue to build a service that delivers for customers, and drives value for stakeholders.

Twitter stock was last seen up about 2% at $34.12, in a 52-week range of $28.3 to $45.86. The consensus price target is $36.14.