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ELON MUSK‘s offer to purchase Twitter for $43 billion, as per a regulatory filing on Thursday. The surprise move has been labeled by some experts as merely a whim to garner attention, while others speculate that this is a game-changer that will end with him taking over the entire company.
The Tesla CEO, who owns 9.2 percent of the social media site and is the company’s biggest shareholder, has offered to buy the remaining percentage of the company for $54.20 per share. Which is a 38 percent premium on the price before his investment in the company that was announced on April 5.
In a letter to Bret Taylor, chair of Twitter’s board, Musk said he had invested in Twitter as “I believe in its potential to be the platform for free speech around the globe, I believe free speech is a societal imperative for a functioning democracy.” However, Musk added, “I now realize the company will neither thrive nor serve this societal imperative in the current form.” His solution is to take the company private.
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If the offer, which was presented as final, is rejected, Musk has threatened to rethink his current position as a shareholder. “This is not a threat, this is merely not a good investment without the changes that have to be made,” as per Musk.
Elon Musk’s offer and Twitter’s response
Twitter’s response was swift, Spokesperson Brenden Lee gave WIRED a statement saying the company would “carefully review the proposal to determine the course of action that it believes is in the best interest of the company as well as all of Twitter’s stockholders.” Twitter’s share price did rise to $48.70 before trading opened on April 14, it is up more than 6 percent from the day before. The stock had opened up for trading at $48.36.
Even if Musk, the company’s largest shareholder, wants the sale to go ahead, the rest of the large shareholders, including The Vanguard Group, Morgan Stanley, BlackRock, as well as State Street Corp, might not want to.
A deal is never done until it is closed, and the deal could be stalled before it even begins. Given the offer as well as the obvious intentions behind it, Twitter’s board of directors could implement a shareholder rights plan, informally which is also called a “poison pill,” that when put in effect would prevent any individual shareholder from buying more than, for example, 10 percent of the company. This would dilute the value of the Twitter stock, thus, allowing other shareholders to ramp up the investments at a discounted price.
Even if the bid proposed by him fails, and Musk does not get to see how well he could run Twitter along with Tesla and SpaceX, as Twitter’s primary shareholder, he will still likely win for sending the stock price soaring.
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Twitter employees worry that Elon Musk will destroy the company’s culture while creating a punishing work environment akin to Tesla. Tesla CEO suggested that Twitter no longer promoted free speech. He asked his millions of followers if the company needed a tool that allows users to edit their tweets after posting them.
Already Musk has been taking jabs at the culture and how Twitter is being run, it looks like he wants to twist the company into the version of Twitter he has in his mind, which in all honesty might not be good for Twitter, or the users.
Thankfully, Twitter management countered on Friday with the poison pill, so the discussion of, if Musk buying Twitter would be bad (it would be) or save the company seems pointless.
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