Elon Musk Buying Twitter

       Elon Musk's Twitter purchase takes a new turn.

This is a big plot with a lot of fast-paced elements. It's also a story that will most certainly unfold over the next few months, if not years.

In a document issued Thursday, Elon Musk proposed to buy Twitter for $54.20 per share, claiming that the social media firm needed to be altered privately, just over a week after revealing a 9.1 percent ownership in the company. Musk's bid puts the worth of Twitter at around $43 billion.

"I invested in Twitter because I believe it has the potential to be a global platform for free speech, and I believe free speech is a societal requirement for a functioning democracy," Musk wrote in a letter to Twitter Chairman Bret Taylor, which was made public in a securities filing.

On Thursday, Twitter's stock fell 1.68 percent. The announcement caused Tesla's stock to drop by more than 3.6 percent.

The social media firm, according to Musk, has to go private since it can "neither prosper nor serve" free expression in its current position.

"As a result, I'm offering to buy 100% of Twitter in cash for $54.20 per share, a 54 percent premium over the day before I started investing in Twitter and a 38 percent premium over the day before my investment was publicly publicized," he said. "If my offer is not accepted, I will have to reevaluate my position as a shareholder."

According to the filing, Musk has hired Morgan Stanley as a financial advisor. Later that day, during a discussion at TED2022, he stated that he isn't interested in buying Twitter to profit from it and that he isn't sure if he will even be able to do so.

"This isn't a means to make money," Musk said at TED2022. "It's just that I think having a public platform that is maximally trusted and broadly inclusive is really vital to the future of civilization," Musk said. "But, absolutely, I don't give a damn about economics."

During the discussion, he also stated that for a private corporation, he would aim to retain as many shareholders as possible.

The announcement comes only days after Twitter CEO Parag Agrawal cautioned investors that "distractions" were on the way.

How did the musk-twitter story get started?

Elon Musk stated on April 4th, 2022 that he has purchased 9.1% of Twitter. The announcement that the world's richest man had become (temporarily) the largest stakeholder in his chosen social media platform sent the stock price skyrocketing and many a keyboard clacking.

Musk responded by posting a poll, which he used to collect recommendations for ways to improve Twitter. The corporation replied by providing him a seat on the board of directors, limiting his ownership to only 15% of the company. Initially, he answered yes. Then he had a change of heart and said no. Meanwhile, Casey Newton and Liz Lopatto, our resident Twitter and Musk specialists, probed deeper into why Musk was flirting with Twitter and what the potential outcomes would be.

Musk says his Twitter buying offer is "best and final"

Anyone who has ever looked for a home understands what "best and final" offers are. Musk argues in his first salvo that his offer to buy Twitter is exactly that. It's too early to tell whether this strengthens his position or paints him into a corner. But it's evident that he's giving Twitter's shareholders a good deal: $43 billion for a company with a market worth of $37 billion.

Musk claims that Twitter must go private in order to make the necessary reforms. An edit option, an open-source algorithm, less moderation, and a higher threshold for removing objectionable tweets are among them.

The SEC filings were the first indication that Musk might try to go big

Musk modified his filing with the Securities and Exchange Commission after declining a seat on Twitter's board of directors to emphasize that he would not be a passive participant in the company's business. The language stating that he will limit his interests to 14.0 percent of the corporation was removed. In retrospect, this was the first hint that he may try something more significant than simply buying shares or serving on a board of directors.

To thwart Musk's takeover bid, Twitter's board adopts "poison pill"

Twitter's board members are organizing their response to the world's richest man's takeover scheme behind the scenes. The poison pill, as well as earlier provisions in the company's rules, could make assuming control exceedingly difficult for Musk.

The company's board of directors responded with a poison pill the day after Musk revealed his intention to buy Twitter. This is the board's equivalent of saying, "Thanks, but no thanks."

Companies that wish to ward off a hostile takeover approach frequently deploy the poison pill strategy. It effectively allows the company to flood the market with new shares or allow existing shareholders who aren't the potential acquirer to buy shares at a reduced price. This dilutes the bidder's equity and raises the cost of purchasing shares.

The poison pill is a new "shareholder's rights plan" that allows some shareholders to buy more stock if Musk or another buyer tries to take control. It also indicates that Twitter's board of directors intends to oppose Musk's attempt for exclusive ownership of the firm.

Mr. Musk's bid should be rejected, according to Saudi Arabian Prince Al Waleed bin Talal, who characterized himself as one of Twitter's largest and most long-term shareholders, since it does not reflect the company's "intrinsic value."

According to FactSet, Twitter's other major shareholders include the Vanguard Group, which owns 10.3 percent of the firm, Morgan Stanley Investment Management, which owns 8%, and BlackRock Fund Advisors, which owns 4.6 percent. Mr. Musk's bid was met with silence from Vanguard and Morgan Stanley Investment Management. Requests for comment were not immediately returned by BlackRock.

Musk's understanding of "free speech" is worrisome at best

Mr. Musk, a Twitter tycoon with nearly 82 million followers, has long campaigned for the importance of free speech. He has regularly chastised Twitter for overly restricting its platform, and he has previously proposed a major transfer in power in social networking from mammoth corporations to users.

Musk went on stage in Vancouver for a well-timed interview with TED Talk founder Chris Anderson only hours after launching his attempt to buy Twitter. Musk mentioned his "obsession with the truth" during the chat, echoing comments he made in his SEC filing about wanting to defend free speech and democracy.

However, as Adi Robertson makes out, his concept of free speech is at best hazy. She concludes that if Musk succeeds in purchasing Twitter, he may be in for a nasty awakening, based on Musk's words and recent efforts by Twitter's administration to deal with speech laws around the world.

Mr. Musk has long used Twitter to slam critics, mock Tesla short-sellers, and suggest extravagant space exploration plans. In addition, he has distributed false information concerning the pandemic. In a tweet in 2018, he pondered about taking Tesla private and falsely stated he had secured finance for the transaction, for which he was fined $40 million by the Securities and Exchange Commission.

According to the letter written to Twitter's chair, if Mr. Musk's buyout offer is not accepted, he will "need to reassess my status as a shareholder."

What will happen next in Musk's takeover bid for Twitter?

Elon Musk has made a bid to purchase Twitter for $43 billion. What will — or could — happen next is as follows:

The proposal is examined by the board. The board will consider Mr. Musk's bid with the help of Goldman Sachs advisers. They'll have to examine if the deal is fair in terms of valuing the company and whether Mr. Musk has the financial means to pull it off.

According to Steven Davidoff Solomon, a professor at the University of California, Berkeley's School of Law, the board cannot simply say it does not like Mr. Musk as a suitor, but it can "come up with reasons why they don't like the bid," such as his capacity to fund it.

The board makes their decision public. The board will most likely need a few days to consider the proposal. If it rejects the offer, it has a number of options: It can install a poison pill defense mechanism, limiting Mr. Musk's and every other shareholder's ability to buy Twitter shares on the open market.

There are several reasons why Twitter may decide against releasing a poison pill. It may be concerned of accusations that it is using a poison pill to divert the concerns of a loud member of the community.

Similarly, Mr. Musk, whose last disclosed ownership in Twitter was little over 9%, has an incentive to maintain his share of the company below 10%. He will be limited in how quickly he can sell out of the company once he reaches that barrier.

If Twitter rejects the offer, Mr. Musk may raise his offer, despite having previously stated that it was the best and final offer. He may also make a direct offer to other owners, known as a tender offer, in which he would purchase shares from other shareholders.

Nonetheless, at least one stakeholder has already stated that the deal is undervalued.

The board might be on the lookout for a white knight. "Twitter has virtually been for sale since they went public," said Howard Berkenblit, head of Sullivan & Worcester's Capital Markets business.

Mr. Musk's most recent actions are likely to have heightened interest in a deal, as well as Twitter's willingness to do so. Given the increased interest in the social media giant's power and reach, some private equity firms may be scared off by Twitter's minimal cash flow, but a number of technology businesses may take a look.