Elon Musk’s Bold Twitter Bid Could Change It Forever — But Will He Succeed?
Billionaire entrepreneur Elon Musk has his sights set on Twitter, with a $41.4 billion ($A58) billion takeover bid this week.
Tesla’s CEO said the social media company had to be taken private to grow and reach its “potential to be the platform for free speech around the world.”
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Musk made the offer on Wednesday in a letter to the board of Twitter. The request was made public on Thursday in a regulatory filing.
He is already the second largest shareholder in the San Francisco-based company and has bought 9.1 percent of the company for $3 billion ($A4 billion). Still, on Sunday, he told Twitter he would not join the board of directors.
Later this week, he made his move to take over the company.
Its bid price of $54.20 per share represents a 38 percent premium to Twitter’s April 1, the last trading day before its 9.1 percent stake in the social media platform was made public.
He claimed the offer was not a money-making move but a bid for democracy and a turning point for civilization.
Elon Musk has offered to buy Twitter just days after turning down a seat on the company’s board. Credit: AP
“I think it’s really important that there’s an inclusive arena for free speech,” Musk said at a TED Talk in Vancouver when asked why he was making the offer.
While he could “technically afford it,” Musk — the world’s richest man with a net worth of $259 billion — said his goal was not to monopolize the company but to retain as many shareholders as possible “like the law in a private company”.
Musk has been an outspoken critic of Twitter in recent weeks, largely because of his belief that it does not adhere to the principles of free speech.
“I invested in Twitter because I believe in its potential to be the platform for free speech around the world, and I believe that freedom of speech is a societal necessity for a functioning democracy,” Musk said in the filing.
“However, since I made my investment, I now realize that the company will not thrive in its current form and will not serve this social need. Twitter needs to be turned into a private company.”
Will Musk’s bold offer succeed?
Twitter’s board of directors will have to consider coming to the table to discuss a deal with Musk or consider other avenues, including potentially seeking alternative buyers.
“The board has three options: one, they can do it alone, say, ‘Get lost, we’re good,'” said Donna Hitscherich, an associate professor at Columbia Business School. “Two is that they can work with Musk at this price or another price. Third, they can find someone they like more.”
It is possible that the board of directors, which has a fiduciary duty to recommend what is best for its shareholders, will determine that Musk’s offer is good to accept.
Musk’s bid of $54.20 per share is an 18 percent premium to Wednesday’s closing price and is 38 percent higher than its closing price on April 1, the last trading day before Musk disclosed his more than 9 percent ownership stake in Twitter. †
“The offer looks very attractive, well priced, and the board, with all its fiduciary duties, will have to look closely at it to see if it is a fair price and, of course, whether the acquisition is for everyone in the longer term. Said Mike Useem, a professor of management at the Wharton School at the University of Pennsylvania.
He added that the board might also consider what a Tesla and SpaceX CEO takeover could mean for employees and users of the platform, some of whom have expressed concerns about Musk’s influence. But the effect on shareholders will likely be the board’s top priority.
Still, it’s unlikely the board will say, “Yes, thank you very much, and accept the offer,” said Kenneth Henderson, partner at law firm Bryan Cave Leighton Paisner.
As part of the process of considering the deal, the board of directors will likely analyze and discuss with lawyers and bankers how Musk’s offering compares to the company’s potential long-term value if it continues its current path as a publicly traded company with its existing one. Strategy.
Reactions to the billionaire’s offer
News of his Twitter investment sent US stock soaring 27 percent earlier this month, suggesting Musk made a roughly $1.1 billion profit on his $2.6 billion investment.
That equates to a return of about 40 percent on a two-month investment for Musk.
Musk’s offer to buy out the company did not immediately convince investors.
Some argued that it underestimated the microblogging platform, which has become a global communication tool for individuals and world leaders.
The Saudi Arabian prince, Alwaleed bin Talal, tweeted about the deal from his verified account.
Describing himself as one of Twitter’s “largest and long-term shareholders,” he said Musk’s offer undervalued and rejected the company.
Musk responded to the prince, tweeting, “How much of Twitter does the Kingdom own, directly and indirectly?”
“What is the vision of the Kingdom on journalistic freedom of expression?”
Musk, for his part, told Twitter it was his “best and final offer” and said he would reconsider his investment if the board rejected it.
Defending his offer
Musk defended his offer to take over Twitter on Thursday, saying during his onstage interview at the TED conference that he sees the takeover as nothing short of a turning point for civilization.
Musk said the proposed deal wasn’t about the economy of Twitter’s company but about ensuring Twitter remains a trusted platform for democracy — and described his vision in signature sweeping terms.
“This is no way to make money,” Musk told TED chief Chris Anderson.
“My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important for the future of civilization.”
The Tesla and SpaceX CEO railed at what he saw as a lack of free speech on Twitter, saying Twitter should open source its algorithm to increase transparency in the company’s content moderation decisions.
That would reflect a major shift in the way Twitter currently works.
Musk’s Twitter Vision
“The code should be on Github so people can look through it and say, ‘I see a problem here,’ ‘I disagree,’ they can flag issues and suggest changes,” Musk said.
When asked how he would change Twitter’s content moderation, Musk explained that his test of a platform’s adherence to free speech principles is simple: “Can someone you don’t like say something you don’t like? And if that is the case, then we have freedom of speech.”
Musk mused that if a tweet was going to be particularly controversial, maybe the company shouldn’t promote that tweet, but added: “I think we want to be very reluctant to take things down and just be very careful about permanent bans; time outs are better.”
Twitter shares rose in the US after Elon Musk offered to buy the social media group. Credit: AP
Musk acknowledged that even if he bought the company, there would still be mistakes.
“I think everyone will still blame me for everything,” he said.
“If I take over Twitter and something goes wrong, it’s my fault, 100 percent. I think there will be quite a few mistakes.”
When asked if he had a backup plan if his bid to buy Twitter failed, Musk said he had “different” ideas. But he hesitantly refused to elaborate, saying those would have to wait “at another time.”
Company moves to locate staff.
Twitter Chief Executive Officer Parag Agrawal has tried to reassure employees, a source familiar with the matter who declined to be identified because they were not authorized to speak publicly, Reuters told Reuters.
On Thursday, when Agrawal answered questions from employees posted to the company’s Slack messaging service, he encouraged employees to stay focused, telling them that “we as employees control what happens,” the source said.
Agrawal told staff that the board continued to review Musk’s offer but was limited in what he could share with the employees.
In part of the question-and-answer session, an employee asked how the company decided to offer Musk a board seat.
“Are we just going to start inviting all the billionaires to the board?” according to a portion of the meeting heard by Reuters.
Agrawal replied that the board acted in the best interests of the shareholders.
“I have a strong view that people who are critical of our service, their voice is something we need to emphasize so we can learn and get better,” he said.
-With AAP, CNN