On April 14, Tesla CEO Musk announced that he would buy Twitter for $54.20 per share in cash.
Musk said the offer was his best and final offer, and if the offer is not accepted, he will need to reconsider his position as a shareholder. Musk said Twitter needs to transform into a private company, and Twitter has extraordinary potential that he will unleash.
Image source: Figureworm Creative
It plans to spend $43 billion
According to the Financial Times, the acquisition totals about $43 billion (more than 270 billion yuan), and analysts say it becomes a hostile takeover offer that will cost a lot of cash and time, and Musk will have to sell a considerable amount of Tesla stock to finance it, or provide huge loans for it.
Adam Crisafulli, founder and analyst at Market Intelligence Firm Vital Knowledge, said in a note that the $54.20 a share offer was "too low" to be accepted by Twitter shareholders and boards. He said Twitter's stock price also hit $70 less than a year ago.
After the news was released, Twitter pulled up 15% to $51.50 before the market, and Tesla plunged 1.21% before the market, quoted at $1022.37. Dogecoin, which is deeply tied to Musk, rose 8% in the short-term, with a maximum price of $0.147.
In fact, Musk has been "coveting" Twitter for a long time, and since March, he has quietly bought shares in Twitter in the market. On March 14, his stake in Twitter reached a 5 percent warning line, and he should be made public as required by U.S. law. But he continued to buy at the market price at that time, until his stake reached 9.2%, and he did not make it public.
A few days ago, some former shareholders of Twitter sued Musk, accusing him of manipulating the stock price for improper benefits.
In a class-action lawsuit filed in U.S. Federal District Court for the District of Manhattan, prosecutors said Musk did not disclose his 9.2 percent stake in Twitter by March 24 and made "material false and misleading statements and omissions."
It is reported that according to the relevant securities laws of the United States, when an investor owns a certain number of shares in a company (more than 5%), it must be disclosed in a timely manner (within 10 days). According to a SEC filing, Musk took a 9.2 percent stake in Twitter on March 14, so it needs to be released by March 24. But Musk didn't disclose the news until April 4.
Former Twitter shareholders, led by Mark Rasella, argued that the delay in disclosure would have allowed Musk to buy more Twitter stock at a low price earlier and fraudulently let them sell the stock at a lower price, missing out on a share price rise.
In addition, on April 11, Twitter CEO Parag Agrawal first took a stand, saying that Musk refused to enter Twitter's board, but twitter will take Musk's opinion seriously in any case and be open to him entering the board. Musk then filed a filing with the SEC to reconfirm his intention to enter Twitter's board and said he might engage in discussions with Twitter's board, including strategy and governance.
It's worth noting that if Musk promises Twitter to become a board member, his stake before the 2024 shareholder meeting can't increase to 14.9%, but Musk ultimately refused to enter the board, meaning he can still continue to buy Twitter's shares without an upper limit.
How do you "reinvent" Twitter?
Musk, who has "banknote ability", began to sell a large number of Tesla shares last year in order to enter Twitter.
According to the latest data from the Bloomberg Billionaires Index, Musk has a wealth of about $259.3 billion, of which $176.5 billion is Tesla's holdings, $56.3 billion is Tesla options, $40.3 billion is SpaceX equity, and $3.4 billion is Twitter equity. Bloomberg data estimates that Musk has only $3 billion in cash and other assets.
Musk has been a deep user and critic of Twitter, currently tweeting more than 17,000 tweets, having 80 million followers on the platform, and arguing that the social media company should be privatized.
On the evening of April 14, a 13D document disclosed a letter sent by Musk to Twitter Chairman Brett Taylor. In the letter, Musk lashed out at Twitter's current situation, arguing that the social media giant could not meet the needs of society's "free speech" and would not flourish.
As a result, Musk offered to buy a 100 percent stake in Twitter at a share price of $54.20 per share to help Twitter become a "global platform for free speech."
Previously, on March 25, Musk had released a vote saying that Twitter should publish the core algorithm. The vote was approved by 82.7%. On the same day, he posted another vote that read, "Do you think Twitter adheres to the principles of Free Speech?" He also cautioned that "this vote is very important." Please vote for you carefully. As a result, more than 2 million netizens participated in the vote, and 70.4% of people believe that Twitter did not follow this principle.
Musk also tweeted recommendations to set identity badges, ban ads, lower fees, and accept Dogecoin payments for Twitter Blue premium subscribers.
Musk also floated the idea of converting Twitter's San Francisco headquarters into a homeless shelter "because there's no one there anyway." Twitter announced last year that its employees could work from home indefinitely.
This may also mean that decentralization and open source will become Musk's entry point to Twitter's "unleashed potential.".
(Editor-in-Charge: Peng Bo)
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