Photo by Martin-Schoeller // Illustration by Forbes
bloodWhoa. It was fast!
Just eleven days after Elon Musk offered Twitter to pay $54 a share, the company’s board approved the deal on Monday, a surprising turnaround. Twitter initially appeared to be against the idea, adopting poison as a defense against unwanted bids like Musk, but agreed last weekend when Musk detailed how it might pay. A: A lot of debt (about $25 billion), some stock (about $21 billion), all in Musk’s Tesla stock. (He owns a lot, of which he is worth about $230 billion.) Twitter is priced at up to $44 billion, a 38% premium over the stock traded when Musk first went public.
That’s it – did Elon win? From what day will we be able to see spaceships in the staff parking lot? Truly, we’re in a bit of an orbit around the sun from it, but Musk is clearly in the process of getting what he wants.
What’s next for Musk?
The agreement between the Twitter board and Musk does not appear to include a “go-show period”. Some buyout deals have these provisions where the board welcomes competitive bidding. (It’s like when the auctioneer begins with a sweet voice, “Go once…”) Goshops are of different lengths and subject to terms agreed upon by the buyer and seller. Adding a goshop (usually around 1 month to 6 weeks) is considered beneficial to investors and the board does its best to get the highest price. But in Delaware, where Twitter is incorporated, goshop is not required by law, so it’s no wonder Twitter doesn’t do that. (Skip this to add to Wall Street’s feeling that, despite the help of JPMorgan and Goldman Sachs, Twitter has gotten little attention when shopping in the past few weeks to avoid Musk.)
Musk will next make a $54.20 public offer to increase his stake in Twitter to at least 50%. The public offer is for him to ask the shareholders to sell their shares. He owns 9.2%, or about 73.5 million shares. To get more than 50%, you’ll need another 319.5 million shares, at a cost of $17.2 billion. easy. He is preparing to raise $46 billion in funding.
As discussed by the board last weekend, Musk Reportedly I spent the weekend talking to the major shareholders on the phone. No rocket science required there. Musk, or some members of Team Musk, undoubtedly added an example from last weekend and knows that Musk could fall into control of the majority. There are very few scenarios where a shareholder suddenly revolts and prevents him from going above 50%. Again, this is highly unlikely. The board received an approval stamp, and the deal was given thumbs up by many analysts following Twitter.
Public Offers will remain open for 20 business days. Brian Quinn, a professor of corporate law at Boston College, says, “Then any shareholders who don’t respond to his offer will be liquidated by the company.” “The company cuts the check for $54.20 per share of the stock you still own.”
What could have stopped Musk?
Few other than unexpected divine actions. Because Twitter is not affiliated with a company like Snap, US regulators are unlikely to oppose Twitter on antitrust issues.
It is some behavior of Elon that we cannot explain or really foresee. With everything Musk-related, the once-in-a-lifetime unexpected is unlikely to happen right now, at this point in our lives, but it’s non-zero. The person truly redefines convention and predictability. Wait a minute, he tweeted Making a genital joke involving Bill Gates. Next, he acquires Twitter, with the approval of a board of directors of 11 highly educated and well-paid directors, including Jack Dorsey, who was (twice) former CEO and co-founder of Twitter.
What are Musk’s plans for Twitter and Twitter Inc.?
The board expects the transaction to close this year. For now, CEO Parag Agrawal is watching the process complete. After that, it’s no surprise to see him leave less than a year after he took over his place at Dorsey last November. Musk wasn’t too quiet about his criticism of Agrawal and Twitter in his current state. If he wants to fire Agrawal, a $38.7 million severance package will be triggered, but it probably won’t. More broadly, the company reportedly told the staff There will be no “current” layoffs during Monday’s plenary session.
Going forward, we’ll see if the spaceship execs can make Twitter more like warp speed. (And if he really wants it.) The company has grown more ambitious in the past few years after being initially entangled with other unwelcome investors. However, Wall Street became increasingly suspicious of Twitter’s ability to meet the high goals set before Dorsey left. These include revenues growing 50% to $7.5 billion from 2021 to 2023; (1) the current advertising market is generally sluggish due to fears of consumer spending; The inherent distractions of change and (3) hostile arguments, even drawing conclusions this quickly. (This moved really quickly. For comparison, the Oracle-PeopleSoft saga took 18 months (18 months!) to reach the same point that Musk and Twitter reached in less than 3 weeks.)
Musk variously said he wants the platform to better embrace the principle of freedom of expression, reduce advertising, make algorithms public, add editorial tools, increase user authentication, and block spam bots. He also once suggested in a TED Talk interview that he had absolutely no interest in the business side of Twitter. Of course, there is another part of Twitter: the cultural cache it exudes. This is the part that has made Twitter popular with presidents and celebrities alike in 16 years. pain that cannot be healed For one man who went from celebrity to president. This part of the culture has always seemed significantly disproportionate to the part of the business, and such a situation is a flashing neon invitation to someone like Musk who thinks they can finally fix what Ev Williams, Dick Costolo and Jack Dorsey (twice) couldn’t. Because, hey, it couldn’t be more difficult than launching a man into space on a semi-regular basis.
Here’s what sounds very Musk like in a press release announcing the deal, as Musk talks about the future and why he did it in the first place.
“Freedom of expression is the foundation upon which democracy works, and Twitter is a digital town square where issues important to the future of humanity are discussed,” Musk said. “Twitter has tremendous potential. It takes a community of users to unlock it.”
One thing is certain. These changes will require a lot more time (and patience) than Musk initially buying the site.
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