Elon Musk Pulls Master Class in Trolling With Twitter Takeover Bid – But There Are Real Consequences
”This may be the most epic troll ever,“ says an employee of the social media company as a brewing battle causes havoc on Wall Street and beyond
Elon Musk just pulled off a master class in trolling with a tweet that sent Silicon Valley’s notoriously woke tech workers diving for their nearest safe space. And while it may be fun and games for the world’s richest man, there are some real-world consequences.
The billionaire’s four-word post — “I made an offer” — ricocheted from Wall Street trading floors to
Washington’s top financial cop. Twitter called an emergency board meeting to fend off Musk’s $43 billion hostile takeover bid, and the financial press made it their top story.
While this whole thing started when Elon Musk has made an offer to buy Twitter (TWTR) and take it private, saying he believes the company needs to be “transformed.”According to an SEC filing, Musk has offered to acquire all the shares in Twitter he does not own for $54.20 per share, valuing the company at $41.4 billion. That represents a 38% premium over the closing price on April 1, the last trading day before Musk disclosed that he had become Twitter’s biggest shareholder, and an 18% premium over its closing price Wednesday. Musk said the cash offer was his “best and final offer,” according to the SEC filing, adding that if it’s not accepted he would have to reconsider his position as a shareholder.
The Tesla CEO sent an offer letter to the company Wednesday night, according to the filing.
“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,” he said in a letter he sent to Twitter. “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.”The letter was addressed to Bret Taylor, the chair of the Twitter board, not CEO Parag Agrawal, who assumed that title last fall. It concludes: “Twitter has extraordinary potential. I will unlock it.”
Twitter issued a statement Thursday confirming that it had received the offer. The company said its board would carefully review the proposal “to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders.”
Shares of Twitter (TWTR) shot up as much as 13% in premarket trading on the offer Thursday, but soon retreated. Stocks were trading up about 6% following the market open, suggesting that investors had doubts the offer will be accepted.But it will be difficult for Twitter to reject Musk’s bid at the price he is offering, said Dan Ives, tech analyst with Wedbush Securities.”Musk is putting the Twitter board’s backs against the wall,” Ives said. “The premium is at a level that will be hard to see other bids occurring.”But to get a return on a bid this high, Twitter would need to do more to bring in subscriber revenue and cut costs, Ives said. Musk’s commitment to use the company to promote greater free speech doesn’t do much, if anything, to increase its profitability.”Musk making this about free speech is the exact opposite of what every other corporate raider would do about monetizing the company’s value,” Ives said. “It’s historic and bizarre at the same time.”Musk has by far more Twitter followers than any other CEO with 81.6 million, and is a much more prolific tweeter than the handful of celebrities who have more followers.While other critics of Twitter complain the social media platform has not done enough to control the spread of misinformation, Musk has expressed more concern about efforts to limit what users are allowed to tweet. Last month he said he was giving “serious thought” to creating a new social media platform.”Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” Musk tweeted last month. “What should be done?”Last week, Musk disclosed he had been buying shares of Twitter since late January, and that he had spent $2.6 billion to accumulated 73.1 million shares, which at the time represented a 9.1% stake, according to what the company had disclosed at that point about the number of shares that are held by investors.But in February Twitter announced it planned to repurchase $2 billion worth of shares in an effort to raise its stock price. And on Thursday the company disclosed that there were 37 million fewer shares outstanding than previously indicated.That reduction in total shares increased Musk’s stake to 9.6% without him having to purchase a single additional share. And it reduced the total value of the company by $2 billion based on Musk’s $54.20 offer price.After Musk’s stock purchase disclosure, he initially accepted an offer of a seat on the board, an agreement that included a cap on his total investment in the company at 14.9%.On Sunday Twitter CEO Parag Agrawal disclosed Musk had decided not to join the board, thus removing that limit.Musk had been unusually silent on his plans for Twitter in the days since then.
The price he suggested for Tesla at that time, $420 a share, was seen highlighting April 20, the unofficial holiday of marijuana enthusiasts. The $54.20 per share offer for Twitter also includes “4.20.”.
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