Twitter, in addition to the deal with hedge fund Elliott Management, announced that private-equity firm Silver Lake will make a $1 billion investment in the company. Twitter said it plans to use Silver Lake’s investment as part of funding a $2 billion stock buyback program in the future.
Under the agreement with Elliott Management, which owns about 4% of the Twitter’s common stock and economic equivalents, two new board members will be appointed to the board: Egon Durban, co-CEO and managing partner of Silver Lake; and Elliott partner Jesse Cohn. Twitter’s board will seek to name a third new independent director, “focusing on candidates that reflect the diversity of the Twitter service and [who] also possess deep technology and AI expertise.”
Elliott Management had reportedly been trying to get Dorsey axed as Twitter’s CEO. Dorsey is also the CEO of payments company Square and had previously said he would be spending up to half the year in Africa. Last week, at the Morgan Stanley Technology, Media & Telecom Conference investment conference, Dorsey said he was reconsidering moving to Africa in part because of the global coronavirus outbreak.
Patrick Pichette, Twitter’s lead independent director and former CFO of Google, said in a statement that “while our CEO structure is unique, so is Jack and so is this company.” The company’s board is creating a temporary board committee that will “provide a fresh look” at Twitter’s executive leadership structures.”
Dorsey said in a statement, “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.”
Elliott Management has a track record of buying up shares in companies it believes are undervalued and agitating for changes to their businesses. For example, last fall it won several concessions from AT&T including a commitment by the telco to refrain from major acquisitions following its deals for Time Warner and DirecTV.
“We are pleased to have worked collaboratively with Twitter on this constructive engagement,” Elliott’s Cohn said in a statement. “We invested in Twitter because we see a significant opportunity for value creation at the company. I am looking forward to working with Jack and the board to help contribute to realizing Twitter’s full potential.”
Twitter shares were down 5.7% in trading Monday morning amid a massive drop in the broader financial markets amid fears over the economic impact of the coronavirus. The stock climbed into positive territory at midday but closed down 3% for the session.