Cohn Steps Down at TWTR; Standstill Modified in Amendment to Elliott Agreement
Disclaimers: https://www.transactionaldelights.com/disclaimers
Last March, Elliott entered into a cooperation agreement with TWTR to put Jesse Cohn on the TWTR Board (and also to form a Management Structure Committee to evaluate TWTR’s leadership structure[1]). One year later, Elliott and TWTR have disclosed[2] that Cohn’s term will continue, but that he plans on stepping down from the TWTR Board after TWTR’s Nominating and Corporate Governance Committee, in consultation with Cohn, identifies a new Board candidate. Here’s the narrative from Forbes:
“What a different a year makes. Twitter stock is up nearly 175%. Dorsey has gone from seemingly like a distracted boss to tech provocateur, one so confident in his standing he merrily trolled Congress last week while testifying before it. And Cohen and Elliott Management are planning to bowing out, according to a new SEC filing… There’s reason to believe the good times aren’t coming to an end. In a well-received conclave for investors and analysts in February, Twitter unveiled a rosy forecast for the next few years. It said it plans to increase its daily average users by more than 50% to at least 315 million. Revenue, meanwhile, is expected to more than double to $7.5 billion by 2023.”
So, Cohn is leaving on good terms[3]. With respect to the actual amendment to the cooperation agreement, it is unusual to enter into an amendment to continue an agreement between activist and company. The actual amendment was not filed with TWTR’s 8-K (it will be filed in a subsequent 10-Q). However, one interesting thing disclosed in the 8-K description is the change in definition to the standstill period in the original March 2020 agreement - the original agreement (March 2020) had a standstill with a defined period while the amendment (March 2021) is more like an Icahn standstill. Once Cohn resigns, the standstill ends. Query whether that is due to the temporary nature of Cohn’s next three-year term (he plans on resigning once a new director is found, in part to enhance diversity on the TWTR Board – see footnote 3), or whether it is something different for Elliott to use going forward. Spoiler alert: it is probably the former, but as always, will be subject to the facts, circumstances, and leverage. Let's watch out for their next cooperation agreement.
[1] Jack is still here. The March 2020 agreement was framed as a partnership between Elliott, Silver Lake, and TWTR. The agreement between Silver Lake and TWTR included a $1 billion investment by Silver Lake used to fund a $2 billion buyback.
[2] Or announced. The medium is the message.
[3] There was also this interesting article from Mike Leonard, also at Bloomberg, stating that as part of a $47 million settlement between shareholders and TWTR, a diversity pledge was included. The settlement was rejected by the Delaware Chancery Court.
