Elon Musk wants to buy Twitter for 43,000 million dollars, a few days after betraying his promise by leaving the board of directors of the social network. The result of his attack is still unknown.
is Twitter “taken hostage”like some employees fear him since April 14? One thing is certain, for the social network, the bet that Elon Musk tried is extremely dangerous. The head of Tesla and SpaceX, shareholder of Twitter with 9.2% of the shares for a few weeksannounced the same day its intention to acquire the remaining 90.8%, in order to privatize the social network. A real earthquake for the company, which completely lost control of a situation that it thought was under control.
Will Twitter give up and let Elon Musk take it private? Will she be able to settle for a “no” and return to his life as before? Barring one incredible surprise, it looks like Elon Musk will win the battle either way. The businessman may never own Twitter, but the matchup is tilting in his favor.
Elon Musk in a “plan B” for Twitter
Let’s be honest, Elon Musk probably isn’t expecting the “go” from Parag Agrawal, the Twitter boss who welcomed him on its board of directors before Elon Musk planted it six days later. If Elon Musk’s offer is attractive ($43 billion, or $54.20 per share), Twitter, which officially says it’s thinking about making the best decision for its shareholders, is unlikely to accept the offer.
Some very large shareholders, such as the Kingdom of Saudi Arabia, have already said no publicly. Elon Musk is publicly angry with them, denouncing strange links between their interests and their vision of freedom of expression.
Coincidence of the calendar, Elon Musk was the guest of a TED talk on April 14. He confirmed what seems obvious: his “Final Offer” It is not one, there is a plan B. A “no” will not stop it, Elon Musk wants Twitter.
Elon Musk presses on Twitter
How can Elon Musk shake up Twitter? Ironically, all you have to do is go to the social network to get an idea.
On Twitter, the businessman explains on several occasions that, legally, the Twitter management has a duty to make decisions that do not harm its shareholders. And precisely, his proposal to repurchase shares at $54.20 each, compared to the current price of $45.08, is, according to him, the best option for shareholders. In other words, Elon Musk is setting the stage for a potential backlash from Twitter. He explains that the company could be sued by its shareholders and, Trojan horse, guess who is one of Twitter’s largest shareholders: Elon Musk.
Legally too, Twitter’s board of directors has no right to reject Twitter’s offer on the pretext that they don’t like Elon Musk. You need justifications, such as doubts about the financial capacity of the employer. Even if Elon Musk doesn’t have enough cash reserves, he has tens of billions at his disposal, he can sell Tesla shares, and he’ll get bank loans if needed. Even if Twitter refutes the situation of “hostage taking”, reality is coming.
A “poison pill” to block the predator?
What is going to happen ? After rejecting Elon Musk’s offer, which may not be the last, Twitter doesn’t have many options to avoid a doomsday scenario where Elon Musk buys a lot of stock, creates alliances and takes control of the business without asking anyone for advice. The financial press has been talking for a few hours about a mechanism: the poisonous pill, also known as the “ poison pill ».
What is the poison pill? This emergency device would prevent a large shareholder from buying shares by limiting Twitter’s access to the public market. Twitter stock could take a hit, but Elon Musk would be severely hampered in his quest to take control of the social network (he wouldn’t be able to negotiate individually with other shareholders to buy his shares). This scenario does not please him, as he indicated on Twitter that he would act against the shareholders and therefore could be challenged in court. The leaders of the social network know it and, even though they discussed its use on Thursday, I would like to avoid it.
How will this end?
Will Elon Musk ever own Twitter? At present, this possibility should not be ruled out. The company’s management may conclude that this is a good option and establish safeguards to maintain control under the leadership of Musk, who has said he is open to leaving shares to as many former shareholders, after having taken private. Twitter.
Should the showdown continue, Elon Musk seems in any case best placed to win. Twitter will be attacked if you refuse or if you use the poison pill (which can make him money), Elon Musk will try to destroy the reputation of Twitter and could sell his shares to harm the company and, in the best case scenario for Musk, he will end up getting his hands on the social network, in De one way or another. Neither scenario allows Twitter to quickly emerge as the winner of this story. The company is going to live difficult times.
Finally, let’s look at another possibility that seems unbelievable to us: if the attack gets too strong, Twitter could be forced to turn to a player more powerful than Elon Musk and sell out to him. Google, Microsoft, Oracle… Only a tech giant could buy it in cash and guarantee it some independence, while Elon Musk wants to transform it into a social network of “absolute freedom of expression”, without moderation.