For $500 million and $800 million, Binance Zhao changpeng and Sequoia Capital join Musk's buyer consortium to buy Twitter

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THECAPITAL

Why Musk wanted to buy Twitter, the reaction of all parties was mixed.

This article totals 2628 words, about 3.3 minutes

Author | Phnom Penh edits | My people

Source | Rongzhong Finance

（ID：thecapital）

On April 26, 2022, The world's richest man, Musk, officially announced a comprehensive acquisition of the social platform Twitter, and Twitter accepted elon Musk's acquisition agreement. Under the agreement, Musk will buy it for $54.2 per share, for a total of about $44 billion. The deal is expected to close in 2022, when Twitter will become a privately held company.

As for why Musk wanted to buy Twitter, the reactions of all parties were mixed.

Given Musk's outstanding performance in other areas and his extraordinary cognition and behavior, it is believed that the future of Twitter must be "similar to Musk's rocket program" and that "the world is always changed by some unique people."

Musk said, "Twitter is a digital speech plaza where matters of great importance to the future of humanity can be discussed." "Hopefully, the company will continue to provide a platform for people to express different opinions." In addition, Musk also said that he hopes to make Twitter's algorithm public to clarify the specific logic of content recommendation and blocking.

In short, everyone is looking forward to Musk. "If he can really do what he claims to be free speech, it will be a significant watershed for Twitter."

Musk's plan to buy Twitter has actually begun since last December. His friend, former Twitter CEO Dorsey, was forced to step down last December, and in January he quietly bought Twitter's ordinary stake. By the end of March, by the time Twitter reacted, he had purchased more than 73.5 million shares of common stock, or 9.2 percent, through his trust. By April 5, musk had become Twitter's largest individual shareholder on the same day that he officially became foremost for Forbes.

At this point, Twitter could only welcome Musk's joining, but at that time, Twitter did not want to be acquired at all! To limit Musk's further actions, Musk was invited to join the board because the condition for joining the board was that Musk should not hold 14.9% of Twitter shares.

In fact, Twitter is a company with a very dispersed shareholding structure, and Twitter's board currently has a total of 11 members, with a total shareholding of less than 2.5%. Among them, the highest shareholding is still Musk's friend Twitter former CEO Dorsey accounted for 2.253%. But for Musk, who loves freedom, this is clearly not in line with his vision.

As a result, Musk's ambition to acquire all of Twitter's shares and privatize Twitter has become well known. In order to prevent Musk's hostile takeover, Twitter also sacrificed a poison pill plan. The official name of the poison pill plan is "equity dilution anti-takeover measures": when the company faces a hostile takeover, in order to retain its controlling interest, the cost of the acquisition is greatly increased by the other party - once Musk holds more than 15%, then all shareholders except Musk can buy twitter's newly issued shares at half price. In this way, a large number of new shares can be injected into the market, diluting Musk's shares, while giving other shareholders more voting rights.

Unfortunately, for Musk, as long as it is a problem of money, it is not a problem, and his ability to pay money is well known. In a week' time, Musk directly took out $46.5 billion in financing, a premium of 3 billion in cash. In response, Twitter's board had to agree to Musk's acquisition. On April 25, Twitter announced that it had accepted Musk's acquisition agreement. Under the agreement, Musk will buy Twitter for $54.20 per share, totaling about $44 billion.

So, is this price expensive? According to media reports, Barron Capital CEO and one of Tesla's largest shareholders, Ron Barron, directly called out on May 5 local time that Musk acquired Twitter at an "incredibly low price" and will get about 3 times the return in the next few years. As of the close of trading on May 5, local time, Twitter was up 2.75%, and the latest share price was $50.41, and the latest total market value was $38.52 billion.

For Musk's acquisition of Twitter, capital showed strong interest. In the 12 days since, musk's team to acquire Twitter has become increasingly luxurious and grand.

On May 5, a filing filed by Twitter with the U.S. Securities and Exchange Commission (SEC) showed that Musk received another $7.139 billion in financing commitments to acquire Twitter, and the total amount of financing commitments has increased to $27.25 billion.

New investors include Oracle co-founder Larry Ellison, cryptocurrency exchange Binance, asset manager Fidelity, Brookfield (BAM), as well as Sequoia Capital, A16z, and others. Oracle co-founder Larry Ellison invested $1 billion through the Lawrence J. Ellison Revocable Trust Trust, the highest amount among the latest investors, the filings show. Sequoia Capital invested $800 million, VyCapital invested $700 million, and Binance invested $500 million.

In this financing, the $500 million invested by Binance, although it is not too much among the big guys, has attracted widespread attention. Binance CEO Zhao Changpeng said on the social platform on the same day, "This is a small contribution to this transaction." For Zhao Changpeng, being able to take Musk's rocket as a shareholder of Twitter is of great benefit to Binance's imagination after that. Originally, Zhao Changpeng earned money by imagination (virtual).

Rich people have a media heart, binance once invested in American media publisher Forbes in February 2022, making a strategic investment of $200 million. Binance CEO Zhao Changpeng and Musk have the same magic, just 5 years ago, 40-year-old Zhao Changpeng has no house and no car, 5 years later he is already the world's richest Chinese, with a strength of 573.3 billion yuan to suppress Ma Huateng, Zhang Yiming, Zhong Huihui and others. The former richest Chinese man, Zhong Sui, is worth 424.4 billion yuan, which means that Zhao Changpeng has not only become the new richest Chinese, but also successfully squeezed into the ranking of the world's top ten richest people. Unlike Zhao Changpeng's virtual wealth, the acquisition of Twitter is real money and silver, zhao Changpeng's "virtual" wealth, in addition to facing the test of liquidity, but also face the strong supervision of financial regulators in various countries. In his own words, the value of virtual currency is fluctuating, there is no substantial valuation, the market says it is worth it, it is worth it, and it may be worthless if it is not worth anything.

In addition, Sequoia Capital's $800 million investment has also attracted widespread attention, which may be the last big move before Sequoia Capital's global senior managing partner Doug Leone announces that he will retire in July this year.

According to media reports, sources said Musk is expected to serve as the interim CEO of Twitter after the completion of the transaction to acquire Twitter.

Previously, the media has repeatedly reported that Musk will make personnel adjustments to Twitter. According to sources, Musk had told Twitter chairman Bret Taylor that he had no confidence in the company's management. The source said Twitter's current CEO, Parag Agrawal, will remain on until the acquisition is completed. Parag Agrawal once stated at the company's plenary meeting that "under Musk's leadership, the future of Twitter is uncertain."

In addition to the CEO candidate, Twitter's board of directors may also undergo no small changes. Musk told banks that agreed to fund its acquisition of U.S. social networking platform Twitter that he could cut compensation for the company's executives and board members to slash operating costs and would develop new ways to make money for Twitter.

In terms of Twitter's features, Musk wants Twitter's private message function to be encrypted throughout the process. Musk recently posted on social platforms that Twitter's private messages should be encrypted like Signal to avoid anyone spying on or hacking into his messages.

At the May 2 gala, when asked about Twitter's future plans, Musk said he wanted to turn Twitter from a "niche" to a "mainstream" and become as "inclusive" a media platform as possible. "My goal is to achieve all of my goals through Twitter, which is to provide a service that is as inclusive as possible with as diverse and wide-ranging content, and ideally, most Americans will use Twitter chat."

He added: "I've also publicly vowed that Twitter has to get rid of bots, phishing and all forms of scam because it obviously weakens the user experience." We don't want people to be scammed out of their belongings on this platform. ”

Microsoft co-founder Bill Gates said at a meeting on May 4 local time that he was unsure of Musk's motivation to acquire Twitter and believed that social media must play a role in curbing the spread of disinformation. Speaking about Musk's potential impact on Twitter, Gates said whether Musk's $44 billion acquisition of Twitter would bring positive changes to the U.S. social media platform "he could actually make it worse." But he also acknowledges that Musk has had little record of failure in the past.

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