This is the major battle that is shaking Silicon Valley. After acquiring a 9.2% stake in Twitter in early April, Elon Musk launched a spam takeover bid to try to take over the social network, promising to become a champion of free speech. While Twitter is likely to formally reject his proposal by the end of the month, the company on Friday adopted a “toxic pill” aimed at thwarting the Tesla boss’s attack. Will Elon Musk raise his offer? Can Twitter find a white knight? The result remains uncertain and does not leave anyone indifferent.
Why does Elon Musk want to buy Twitter?
In his letter to the authorities, Elon Musk wrote: “I invested in Twitter because I believe in the potential for it to be a planetary platform for freedom of expression (…), which is so socially essential to the functioning of democracy.” According to him, Twitter is a prisoner of Wall Street and short-term necessities, and he needs to “turn it private.” During an interview on the TED stage in Vancouver, he emphasized last week that his goal was not to “make money” but to ensure that Twitter plays its role as “a public place where one can speak freely within the limits of the law.”
Why doesn’t Twitter welcome it with open arms?
As with Elon Musk, everything can change very quickly. Twitter and its new boss, Parag Agrawal, have offered for the first time a seat on the board of directors to whoever has become its largest single shareholder. But Elon Musk finally announced that he won’t be joining board.
Then he offered to buy all Twitter shares for $54.20 (the number 420, pronounced “twenty-four”, the symbol of cannabis in the United States and a frequent joke of Elon Musk), estimating the value of the network at $ 43.4 billion. A premium of 18% over last Wednesday’s closing price is far from amazing, something that Saudi Prince Al-Waleed bin Talal, who owns about 5% of Twitter, was particularly dismissive of. Besides the just war deal, there are “philosophical differences” between Twitter and Elon Musk, analysts at Mizuho Securities wrote in a note.
What is the “toxic pill” that Twitter adopts?
Twitter, which is due to report its quarterly results on April 28, has yet to formally provide its response. But the company on Friday adopted a “toxic pill” designed to prevent – or at least complicate – a hostile takeover. According to this paragraph, if Elon Musk or another investor exceeds the 15% capital bar, the remaining shareholders will be able to purchase the newly issued shares at a discount. This would dilute Elon Musk’s stake, and thus prevent him from acquiring the majority of the title deeds, unless he breaks the bank.
What are the reactions to Elon Musk’s coup?
Unsurprisingly, the web is divided in half. Elon Musk can count on his fan club, particularly on broadcast maker Joe Rogan or crypto investor Cameron Winklevoss – Mark Zuckerberg’s archenemy at Harvard. Musk, who defines himself as the “absolute” of free speech, believes that the platforms have gone too far by pretending to be arbitrators of disinformation, with a moderation drifting, he said, toward “censorship” culminating in the ouster of Donald Trump.
But for many, the idea of attributing the network and its 217 million daily users to a president who himself uses Twitter to hack or attack his enemies is not going well. “Let’s hope the Elon Musk show doesn’t win,” editorial board members wrote at Washington Post In an editorial. To avoid going back to a time when “Twitter could be used to tamper with elections, spread false information, or harass Internet users in packets.” And there are those, like chartered accountant Francine McKenna, who accuse Elon Musk of trying to manipulate the Twitter feed. In 2018, he had already been slapped in the wrist by claiming – wrongly – that he got the private money needed to take Tesla out of the stock market.
Can Twitter find a white knight?
The social network, which is struggling to make money, has been fueling envy for years. In the face of Elon Musk’s onslaught, his salvation could come from a white knight making a better offer to shareholders. A takeover of a tech giant seems unlikely these days, as competition authorities want to avoid mistakes of the past – such as allowing Facebook to buy WhatsApp and Instagram. But according to CNBC, private equity firm Thoma Bravo is considering making an offer. Conversely, giant Apollo Global Management could support the acquisition – of Elon Musk or another party – by providing equity or debt, The New York Times and the Wall Street Magazine. The big maneuvers are just beginning.