SAN FRANCISCO — Twitter on Monday mentioned it reached a deal with Elliott Management, an activist investor that had referred to as for ousting the social media firm’s chief government, Jack Dorsey.
As a part of the settlement, Twitter bought a $1 billion stake to Silver Lake, the technology-focused investor. It intends to make use of these funds to partially fund a $2 billion share repurchase program.
Both Elliott Management, which is among the world’s largest activist funding funds, and Silver Lake, will take seats on Twitter’s board.
“We are excited to partner with Twitter as an investor and a member of the board. Jack is a visionary leader, and a critical force behind Twitter’s ongoing evolution and growth,” Egon Durban, the co-C.E.O. of Silver Lake, mentioned in a press release.
Elliott Management quietly collected a large stake in Twitter in latest weeks — a bit greater than four p.c, making it one of many firm’s largest shareholders — after which introduced its presence to Twitter’s board by nominating 4 new administrators on Feb. 21, shortly earlier than the nomination deadline.
The hedge fund met with the chairman of Twitter’s board, Omid Kordestani, and its impartial director, Patrick Pichette, the next week to debate their proposal: oust Mr. Dorsey from his place as chief government.
Mr. Kordestani and Mr. Pichette advocated a gentler method, arguing that dropping Mr. Dorsey would destabilize the corporate and that Twitter was lastly enhancing its momentum on product improvement and income.
Silver Lake’s supply to take a position, which got here after information of Elliott’s place broke, gave Twitter a method out, permitting the corporate to maintain Mr. Dorsey in place with out making every other modifications amongst its government ranks. Twitter’s full board has been assembly during the last week to finalize the phrases of the settlement to tackle the brand new funding and board members.
“Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward,” Mr. Dorsey mentioned in a press release. Jesse Cohn, a associate at Elliott Management who can even be part of Twitter’s board, referred to as the settlement with Twitter “constructive” however hinted that he would proceed to push Twitter to show a stronger revenue.
“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,” Mr. Cohn mentioned.
Mr. Durban and Mr. Cohn can even serve on a board committee to supervise Twitter’s administration construction.
It was not the primary takeover try that Mr. Dorsey had confronted in his tenure at Twitter. In 2008, he was fired from the social media firm he co-founded, then was introduced again in 2015. A yr later, Mr. Dorsey withstood an acquisition effort by Salesforce.
Since returning to Twitter 5 years in the past, Mr. Dorsey has remained the chief government of Square, a funds firm. His determination to separate his time between the 2 corporations has been controversial and is a key element of Elliott’s effort to push him out of Twitter.
Twitter’s share worth has not elevated considerably since Mr. Dorsey’s return in 2015, when it was $36. In buying and selling this morning, Twitter shares opened at $31.
Mr. Dorsey spoke concerning the firm’s sluggish progress throughout a Morgan Stanley convention on Friday. “Five years ago, we had to do a really hard reset of this company and that takes some time to actually build from,” he mentioned.
The firm has additionally seen frequent government turnover. In 2018, Twitter’s chief working officer, Anthony Noto, resigned to become the chief executive of SoFi, a finance start-up. Since then, Twitter has been without a chief operating officer. Mr. Dorsey has focused primarily on engineering and product development, preferring to leave operations to his deputies.
“Twitter seems remarkably similar as it did in 2015,” said Scott Galloway, a professor of marketing at the New York University Stern School of Business and a Twitter investor who called for Mr. Dorsey to step down last year. “The question is: Does this company, at this moment, warrant a full-time C.E.O. who has an office out of headquarters? The answer, I think, is yes.”
Some investors see Mr. Dorsey as an absentee executive who looks after Twitter as a hobby. Mr. Dorsey exacerbated their worries when he announced last year that he would move to Africa for three to six months in 2020. Some Twitter employees, who declined to be named because they were not authorized to speak publicly, defended Mr. Dorsey, saying he is engaged and meets three times per week with Twitter’s executive team.
On Friday, Mr. Dorsey backpedaled on his travel plans during the Morgan Stanley conference, saying he may put off the trip because of the spread of the coronavirus. “Everything happening in the world, particularly with coronavirus, I have to reconsider what’s going on and what that means for me and for our company,” Mr. Dorsey said.
Mr. Dorsey defended his decision to lead two companies at once. “I have enough flexibility in my schedule to focus on the most important things, and I have a good sense of what is critical in both companies,” he said. “I have amazing teams working. For the first time in our history at Twitter, it feels like we have so much focus that we can ignore a bunch of the noise.”