Truce Declared: Twitter Avoids Standoff With Activist Hedge Fund

Truce Declared: Twitter Avoids Standoff With Activist Hedge Fund

  • Activist investor Paul Singer reached an agreement with Twitter.
  • Singer's hedge fund owns 4% of the social media company.
  • As part of the agreement, Twitter CEO Jack Dorsey won't step down.

Activist investor Paul Singer and his Elliott Management hedge fund reached an agreement with social media company Twitter.

Elliott Owns 4% Of Twitter

Singer and his hedge fund accumulated a 4% stake of Twitter and a proxy war to remove Jack Dorsey as CEO seemed to be imminent. But on Monday the two sides reached an agreement in which Twitter will immediately nominate two new board members and search for a third. 

The agreement also calls for Twitter to buyback $2 billion worth of its own stock. Half of the buyback allocation will be funded in part by a new $1 billion investment from private equity giant Silver Lake Partners.

The two new members of Twitter’s board include Jesse Cohn, a partner at Elliott, and Silver Lake co-CEO and managing partner Egon Durban.

Cohn said in a brief statement in the press release the firm invested in Twitter “because we see a significant opportunity for value creation at the Company.”

Dorsey Stays Put

Dorsey splits his time between acting CEO of Twitter and his fintech company Square. The executive’s part-time status has become a point of frustration among some investors but he doesn’t see it that way.

Dorsey said during a Morgan Stanley event last week he has “enough flexibility” in his schedule to deal with pressing issues at each company, according to The Wall Street Journal.

However, Dorsey’s job doesn’t appear to be safe forever as Twitter’s agreement with the activist investor calls for a new independent five-person committee to evaluate the company’s leadership structure. The committee will include Durban and Cohn along with two additional independent members and will evaluate a CEO succession plan with Dorsey and make recommendations.

The committee will present its evaluation to the entire board of any considerations or recommended changes before the end of 2020.

New Goals And Strategies

In conjunction with Twitter’s truce declaration with the activist investor, Twitter issued a new set of guidelines. Specifically, the company wants to grow its monetizable daily active user base by at least 20% in 2020. Beyond the current year, Twitter intends to accelerate revenue growth on a year-over-year basis and win market share in the social media landscape.

Twitter noted its internal strategies will impede without any pushback by Elliott and Silver Lake. The two investors won’t attempt to directly or indirectly influence any policies or rules. Most important, the two investors will also emphasize the importance of independence and impartiality of the Twitter platform and its rules and enforcement.

By Jayson Derrick
Jayson Derrick has been writing professionally about stocks since 2011. He is particularly interested in alternative investments, hedge funds, and activist investing. He is a big fan of NHL hockey and lives in Montreal, Canada with his wife and four year old daughter.

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