While we recently covered what a hostile takeover would look like, we decided to tackle more burning questions about what’s next for the Twitter and Musk corporate soap opera playing out.
Both are possible. It’s possible Twitter might use this as an opportunity to seek out better offers, using Musk’s deal as leverage. Musk has said this offer is his “best and final offer,” and that if rejected, he will reconsider his role as a shareholder. Reminder: He previously said he would take Tesla private, but changed his mind weeks later. Nothing is ever “final.”
Twitter has confirmed the “unsolicited, non-binding proposal” from Musk to buy the company. Twitter’s board is reviewing the offer and deciding on what’s in the best interest of the company and its shareholders. In an all-hands on Thursday, CEO Parag Agrawal told staffers that he wasn’t legally allowed to disclose details on what’s happening with the offer, but the board was carefully reviewing the proposal from Musk.
If Twitter does turn down the deal, it could then use a “poison pill,” a defensive used in takeovers to let the company offer new shares or shares at a discount to other buyers and shareholders. Twitter could employ this while the board considers Musk’s proposal and any other potential offers, according to Mandeep Singh, analyst at Bloomberg Intelligence.
“It is unclear whether the board officially asks or requests Elon to give a formal proposal on the changes that he wants to make in the company,” Singh told . “So far Elon’s thoughts on improvement or change have been mostly tweets and polls. It will be interesting to see if any other large shareholders, besides [The Public Investment Fund] of Saudi Arabia, express their opinion on Elon’s offer.”
A quick scan of “The Richest in 2022” list on Forbes would indicate that Jeff Bezos, Bill Gates or Warren Buffet all have estimated net worths above $100 billion. Musk is in the top spot at $219 billion. Google founders Larry Page and Sergey Brin also have net worths of more than $100 billion. These might be some of the billionaires that could reasonably afford to buy up Twitter if Musk’s offer is rejected, but it could also be a media giant or another tech player.
Peter Csathy, chairman of CREATV Media, said it’s possible this proposal will entice other buyers to make offers for Twitter. Csathy added: “Twitter is undervalued in the marketplace. Elon has made a play. It’s time for others now to put up, or shut up. … [But Twitter] will fight it. [This is] not a sure thing for Elon. It’s a big check to write — even for him.”
Musk could decide what he wants to do with the company from there, including either running it himself (like he did with Tesla), or appoint new leadership. In the filing, Musk made clear that he doesn’t “have confidence in management” to drive “necessary” changes as a public company.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company. … Twitter has extraordinary potential. I will unlock it,” he wrote.
Overall, Musk controlling Twitter could push it to grow its overall business and drive competition. Twitter may start to see its content moderation policies come into even greater focus as Musk gets more involved. The billionaire has been a major critic of Twitter’s censorship policies, especially in this last month, blasting the platform for not defending free speech and, in his words, “undermining democracy.”
In the market, Twitter has remained a pretty small player in social media when you look at the numbers. The platform has seen some growth in user base — growing average monetizable daily active users in the fourth quarter of 2021 to 217 million users — and reported $5 billion in annual revenue. But it’s still short of the 2023 goal of 315 million daily users and more than $7.5 billion in revenue.
He hasn’t explained how he plans to pay for Twitter, but mentioned, “I have sufficient assets” at TED 2022 on Thursday. It may be made possible through investment partners or by leveraging his Tesla stock. However, he also said in that interview, “I’m not sure that I will actually be able to acquire it. … I could technically afford it. But this is not a sort of way to make money. … I don’t care about the economics at all.”
For this $43 billion offer, he is offering an 18.2% premium on what Twitter shares closed on Wednesday. But Twitter has seen shares trading above $60 last year. The $43 billion is an approximate valuation of Twitter, and Musk notes this is a 54% premium over the company’s value before he began investing in it in recent months.
Honestly, who wouldn’t want both those things? Musk said in the TED interview that he hopes to “open source the algorithm” to try and improve trust in the platform. He’s also made a lot of criticisms about how the platform handles its content moderation policies. He believes the platform fails at upholding its “free speech principles.” He has also mentioned wanting to address Twitter’s scam bots and crypto scams, as well as an edit feature — which Twitter confirmed is coming, and that it has been working on it in the last year.
Busy running Block, previously Square. Even when Dorsey was running Twitter, he was split running the fintech venture. He’s very into crypto. The former CEO of Twitter has yet to comment on Musk’s offer.
