Reports from the Heart of the Machine
Edit: Zenan
$43 billion still doesn't seem enough to buy Twitter.
Elon · Musk's big drama of acquiring Twitter has finally come to this episode.
On April 15, local time, Twitter announced a protective measure to defend against hostile takeover offers to stop billionaire Elon Musk. Elon Musk's proposal to take the company private and try to make it a platform for free speech.
Among them, Twitter's board of directors has developed a shareholders' equity plan, which can be exercised if one party acquires 15% of the shares without prior approval, which is only valid for one year. According to a statement Friday, the plan aims to ensure that "anyone who accumulates control of a social media company through the open market is required to pay an appropriate control premium to all shareholders".
According to people familiar with the matter, Twitter has a plan to buy time. The board met on Thursday to review the takeover offer in hopes of analyzing and negotiating the possibility of a deal, and Musk's offer could still be accepted for now.
On Thursday, Tesla CEO and the world's richest man, Musk, proposed to buy all of Twitter's shares in cash at $54.20 per share, valuing the company at $43 billion. Musk called it his "highest and final" bid, and he has held more than 9 percent of Twitter since earlier this year.
In addition to Musk's proposal, Twitter has been attracting acquisition interest from other parties, including private equity firm Thoma Bravo, according to Bloomberg reported on Friday. Goldman Sachs and JPMorgan are helping Twitter's board advise.
Other analysts said that in this transaction, Musk may choose to cooperate with Oracle - Oracle co-founder Larry Larry Ellison is a Tesla board member and has expressed interest in acquiring TikTok's U.S. assets — and joining forces with a private equity consortium, including Thoma Bravo, to thwart Twitter's poison pill plan while raising bids by 10-15 percent to about $50 billion.
The Poison Pill proposed by Twitter executives is a strategy for listed companies to resist hostile takeovers and be willing to pay a corresponding price, allowing existing shareholders to buy additional shares at a discounted price, which can effectively dilute the proportion of equity of the enemy. This is more common in the event of an attack by aggressive investors or a hostile takeover.
Under Twitter's plan, it would give each shareholder the right to purchase additional common stock at the prevailing strike price, which would be worth twice the market value of the exercise price.
Musk did not respond to the confrontation mechanism on Friday, but thanked 73 percent of the people in the online Twitter vote for his acquisition plan and believed that the tweet character limit should be removed as soon as possible.
Price factors
Musk said in a regulatory filing on Thursday that disclosed the bid, "It's a high price, and your shareholders will like it."
But at least one well-known investor said the offer was too low, and the market reaction seemed to fit that line. Saudi Arabian royal family member and Twitter majority shareholder Al-Walid Ben · Talal said the bid did not "come close to the intrinsic value of this popular social media platform".
But it was also pointed out that the premium of the takeover offer satisfies the interests of shareholders. The Information commented that "if Poison Pill plans to help Twitter drive Musk away, then its stock price will fall back to the level before Musk appeared, that is, between $30-40 — which is roughly what happened to Twitter stocks three years ago, in 2019." By contrast, Google's stock price has nearly doubled since then. This is a reminder that Twitter is not performing well. Therefore, the only way for Twitter shareholders to realize the "full value" of their shares is for the board to sell the company to the highest bidder."
Musk had earlier said he wasn't sure he was "really going to get Twitter." He added that his intention was to retain "as many shareholders as the law allows" rather than sole ownership.
The market seems to lack confidence in potential acquisitions. On Friday, Twitter shares fell 1.68 percent to $45.08.
Twitter, on the other hand, has more than $6 billion in cash on its balance sheet and its annual cash flow of nearly $700 million, which provides assurances of financing in potential transactions. Still, the leveraged buyout for Twitter could be the largest ever and could require several buyouts and other major institutional investors to work together.
The board needs to think about Musk's proposal and submit it to the company's shareholders for a vote only after it has been approved internally. Twitter's board is expected to take a few more days to evaluate bids and draft a response, with no outcome likely this weekend, people familiar with the matter said.
Plan B
Musk announced on April 4 that he had become Twitter's largest individual investor. At TED, he said he had a Plan B if Twitter's board rejected his offer, though not elaborating. In a regulatory filing filed yesterday, he said he would reconsider his investment if the bid failed.
At a TED event in Vancouver on April 14, Musk spoke publicly about the idea of acquiring Twitter, arguing that having a public platform with maximum trust and inclusion is extremely important for the future of civilization, in contrast to not caring about the return on investment.
Interestingly, Musk suggested that algorithmic black boxes can be dangerous for selective recommendations for information flow, and that Twitter's code should be made public on GitHub to allow people to examine, spot problems, and make suggestions.
"I invested in Twitter because I believed in its potential as a platform for freedom, and I believed it was the basis on which democracy works. But after investing, I now realize that Twitter can neither prosper nor fulfill that mission under the current mechanism. Twitter needed to transform into a private company. So I plan to buy all of Twitter shares in cash for $54.20 per share, a price 54% higher than the share price before I invested and a premium of 38% over before I publicly disclosed my investment. This is my last price, and if it is not accepted, I will reconsider my position as a shareholder," Musk said.
Unlike other well-known social networks like Meta and Snap, Twitter doesn't have a founder with majority voting control. This makes the company objectively vulnerable to aggressive investors and acquisition interest. While it's unclear what founder and board member Jack Dorsey thinks about Musk's deal offer, he at least agrees that Twitter is better off going private.
"As a public company, Twitter has always been 'buyable'." Dorsey tweeted. "That's the real problem."
For reference:
https://www.bloomberg.com/news/articles/2022-04-15/twitter-adopts-poison-pill-to-ward-off-musk-takeover?srnd=technology-vp
https://www.reuters.com/technology/twitter-adopts-poison-pill-fight-musk-2022-04-15/
https://www.theinformation.com/articles/musk-s-offer-puts-twitter-in-play
https://www.youtube.com/watch?v=cdZZpaB2kDM
IJCAI 2022 - Neural MMO Massive AI Team Survival Challenge
On April 14th, the "IJCAI 2022-Neural MMO Massive AI Team Survival Challenge" was officially launched, initiated by Hyperparameter Technology, co-sponsored by MIT, Tsinghua University Shenzhen International Graduate School and AIcrowd, a well-known data science challenge platform.
Themed "Finding the Strongest AI Team in the Future Open World", the tournament achieved higher achievements than other contestants by exploring, searching and fighting in Neural MMO's massive multi-agent environment. The game also sets new rules, evaluates the strategic robustness of agents against new maps and different opponents, and introduces cooperation and role division in AI teams, enriching the content of the game and enhancing the fun.