5 things to know about Elon Musk’s Twitter offer
Elon Musk sent the tech world into a frenzy after he shared his offer to buy Twitter for $43 billion on Thursday, just days after news broke that the billionaire would not join the board of administration of the social media giant.
Musk, the world’s richest man, wrote in a leaked letter to the Securities and Exchange Commission in a filing that “Twitter has extraordinary potential. I will unlock it.
“However, since making my investment, I now realize that the business will not thrive or serve this societal imperative in its current form,” he wrote. “Twitter needs to be turned into a private company.”
The offer came after Musk turned down a place on Twitter’s board. He was offered the spot after becoming the company’s largest shareholder when he acquired a 9.2% stake in Twitter.
Here are five things to know about Musk’s takeover.
Musk, in a letter to Twitter Chairman Bret Taylor disclosed in a Securities and Exchange Commission filing Wednesdaythat he would buy the entire company for $54.20 per share, which, gives Twitter a $43 billion valuation, according to CNBC.
The Tesla CEO said his offer was a 54% premium above the price of Twitter shares the day before Musk started investing in the company and an 8% premium above the day before. public announcement of its investment.
Musk, Twitter’s largest shareholder, owns just over 9% of the company.
“I’m offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium to the day before we start investing in Twitter and a 38% premium to the day before public announcement of my investment,” Musk wrote in the letter.
Twitter stock prices fluctuate according to Musk’s statements
Twitter’s share price rose shortly after Musk posted his offer to buy the company on Thursday, adding that his offer to buy the platform was his “best and final” at 54.20. $ per share.
However, the share price fell after Musk suggested that if his “best and last” offer was not accepted, he could sell his stake. Musk said he “should reconsider my position as a shareholder,” according to a letter dated April 13.
“If the deal doesn’t work out, given that I don’t have confidence in management and don’t think I can drive the necessary change in the public market, I should reconsider my position as a shareholder,” Musk said. .
Market Watch reported Twitter shares rose 2.8% in the morning talks. However, The New York Times noted as of noon Thursday, Twitter shares were down that day and said they remained well short of Musk’s offer, suggesting traders’ skepticism of the offer.
Conservatives hailed the tech billionaire’s decision to buy the social media giant, hailing it as a purchase that would restore free speech to the platform following his moves to increase moderation of harmful content.
Former President Trump’s GOP allies welcomed Musk’s offer and expressed hope the company would take it up.
But progressive activists, tech executives and academics expressed concern last week that the platform could become a more hostile environment under Musk’s watch.
“Hopefully the Twitter board will see the light. If they reject his offer, the company’s stock will likely never recover,” Rep. Lauren Boebert (R-Colo.) tweeted.
Former Representative Justin Amash, who announced in 2019 that he was leaving the Republican Party and later became a libertarian, also welcomed the move on Thursday, tweeting that Musk is buying Twitter “This might be the best thing to happen to social media in years.
Since Twitter permanently banned Trump from its site following the Jan. 6, 2021, uprising, Republicans have argued that the website infringes on users’ First Amendment rights.
They also argued that major platforms, including Twitter and Facebook, harbor an anti-conservative bias in their content moderation policies.
Could Twitter’s board reject the offer?
Twitter’s board of directors met on Thursday shortly after the announcement of Musk’s takeover bid, The New York Times reportedciting people familiar with the matter.
Twitter has called an emergency board meeting for 2:00 p.m. EST and a general meeting for 5:00 p.m. EST.
“Twitter’s Board of Directors will carefully consider the proposal to determine a course of action that it believes is in the best interests of the company and all Twitter shareholders,” the company said in a statement Thursday in response to the offer.
However, a source told the Wall Street Journal that Twitter is considering a “poison pill” that would prevent Musk from significantly increasing his stake in the company.
Anat Alon-Beck, an assistant professor of law at Case Western Reserve University, told The Hill: “There are several anti-shark measures companies can take to counter hostile takeovers.
“Most measures are included in the company’s charter and bylaws, which generally makes the company less attractive to acquire,” she added.
Alon-Beck noted that Twitter’s board of directors is bound by the Revlon Rule, the legal principle that a company’s board of directors must make a reasonable effort to obtain the highest value for a company when a hostile takeover is imminent.
“If a sale of control is involved, under Delaware General Corporation Law, Revlon’s principles will apply. The courts will take a closer look at the board’s process and actions to ensure that the sole objective of maximizing shareholder value is pursued,” she said.
She added that acquirers and targets of any going-private transaction should be aware of the fiduciary duties and related requirements applicable to the target company and its board of directors.
“In a transaction involving the sale of a public company for cash that results in a change of control of the target, as is generally the case with any privatization transaction, Delaware law generally requires the board of directors to act reasonably to obtain the best price reasonably accessible to shareholders.
Does Musk have the money?
Elon Musk tops the list of the richest people in 2022 with a net worth of $224 billion. However, despite his wealth, the billionaire is cash poorwith nearly all of its assets tied to shares of Tesla and SpaceX.
Musk said Thursday at the TED2022 conference in Vancouver, Canada, that he was “not sure” he could buy Twitter, according to CNBC.
Wells Fargo analysts also raised concerns for Tesla shareholders about the distractions Twitter would present for Musk in a note Thursday.
“If the deal is successful, there are two concerns from a TSLA (Tesla) shareholder perspective,” Wells Fargo analysts said, according to the outlet.
“First, TSLA is currently in the early days of ramping up two factories, Austin and Berlin, which will likely double its global capacity. Running Twitter would be a possible distraction for a CEO who already has a full plate. Second, the conditions for financing the recovery are unclear. Elon’s most liquid assets are said to be his TSLA shares valued at $170 billion. Forbes estimated his total net worth at $273.6 billion, primarily comprised of TSLA and SpaceX (estimated at $74 billion),” the analyst added, according to the Wall Street publication Street Insider.
Alon-Beck added that “Under Williams law, when an acquiring company makes an offer, or in this case Musk, it is required to provide information about the tender offer to shareholders of the target company and to financial regulators. There just isn’t enough information here – not even information on funding sources.