Twitter has negotiated a truce with the activist investor hedge fund manager Elliott Management, which will see current CEO and co-founder Jack Dorsey remain in charge of the social media company.
Elliott Management, led by billionaire investor Paul Singer, has grabbed a $1 billion stake in Twitter and was previously threatening to remove Dorsey from his role in a mass shakeup, But it appears the two parties have now come to an agreement which would see the company’s board changed drastically but Dorsey keep his role.
Twitter will appoint two new members to its board and will look for a new independent director. The social media giant is also going to buy back $2 billion in shares, a move partly funded by a $1 billion investment from Silver Lake.
Silver Lake’s Egon Durban and Elliott’s Jesse Cohn will be joining the board, and Twitter has also committed to growing its mDAU, a metric used to measure monetizable active users.
Jesse Cohn, partner at Elliott Management, said: “Twitter is one of the most important platforms in the global dialogue, and one of the most innovative and unique technology companies in the world. We are pleased to have worked collaboratively with Twitter on this constructive engagement. 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.”
Elliott Management’s plan to oust Dorsey was apparently partly because Dorsey runs another company at the same time (Square). They also clearly feel the social media company should be more profitable given its importance at the center of global discourse, Elliott has a track record of active investment. Last year the company bought a large stake in the American telecoms company AT&T and published a note criticizing the company’s recent strategy, from acquisitions to stock performance. Elliott called for major changes at AT&T but in the end the telecoms provider was able to agree on certain performance goals.