Activist investor Elliott Management has reached a deal with Twitter that will leave co-founder and Square CEO Jack Dorsey in place as CEO, the company announced on Monday.
As part of the partnership, the social media giant on Monday announced that investment firm Silver Lake will be pouring $1 billion in the company. Egon Durban, co-CEO and managing partner at Silver Lake, and Elliott partner Jesse Cohn will also be joining Twitter's board of directors. Twitter is also launching a $2 billion share re-purchase program that will be executed over time, which it will fund with the new investment from Silver Lake as well as cash on hand. The company is also looking for a third new board member.
Twitter shares were down 8% following the news.
The announcement comes after reports from Bloomberg and CNBC had indicated that Elliott Management, which has a roughly 4% stake in the company, was looking to oust Dorsey as the CEO of Twitter. Part of the reason the activist hedge fund was reportedly looking to replace Dorsey, according to CNBC, was because of his attention being split between Square and Twitter.
Dorsey's plan to move to Africa for an unspecified period of time, which he recently walked back, also contributed to Elliott Management's push for his removal as CEO, CNBC reported in late February. The Twitter CEO recently reconsidered that plan in light of ongoing concerns regarding the coronavirus outbreak among other factors.
In a press release announcing the partnership, Patrick Pichette, lead independent director of Twitter's board, said he is “confident we are on the right path with Jack's leadership.” He also said that a temporary board committee will be created to build on the board's usual evaluation of Twitter's leadership.
The decision also comes after Dorsey recently laid out his vision and priorities for Twitter at the Morgan Stanley Tech, Media, and Telecom conference in early March.
Dorsey said that a top priority for Twitter is maintaining the integrity of the conversation around elections, saying that the company is using machine learning to identify misleading information.
One such way Twitter is making an effort to combat misinformation is through its manipulated media policy, a protocol it announced last month that involves labeling media that may have been deceptively altered. The company applied this tag for the first time on Sunday, labeling an edited video of former vice president Joe Biden that was shared by the White House's head of social media.
During the Morgan Stanley conference, Dorsey also talked about improvements to the company's ad product as well as consumer-facing features, like doubling the character count for tweets.
“Some people talk about the slow pace of development at Twitter,” Dorsey said, according to Twitter's official investor relations Twitter account. “The expectation is to see surface level changes, but the most impactful changes are happening below the surface.”
The Twitter CEO said in a press release that the new investment from Silver Lake is “a strong vote of confidence in our work and our path forward.”