Musk violently pried open the Twitter door

According to the Wall Street Journal website reported on April 14, Musk's conflict with Twitter has lasted for a week.

Musk has launched an all-out offensive to buy the company and warned that he could sell his stake in the social media service if he is refused.

The Tesla company chief bid $43 billion to buy Twitter on Thursday morning, the latest development in the world's richest man and Twitter's saga about "whether he will act."

Musk disclosed an offer in an application filed with the SEC at $54.20 per share.

The report pointed out that Twitter seems to take the matter seriously. The company confirmed it had received the offer and said the company's board of directors would conduct an evaluation.

According to a person familiar with the matter, Twitter is also currently considering the so-called "poison pill plan," a legal mechanism designed to prevent Musk from significantly increasing his stake in the company.

Speaking at the Technology, Entertainment and Design (TED) Conference in Vancouver, Canada, on Thursday, Musk said: "A public platform with the highest credibility and broad inclusion is critical to the future of civilization. I don't care about the economy at all. ”

So let's comb through and sort out, what happened to this week's tug-of-war? On March 26, Twitter-loving Musk tweeted several tweets expressing his displeasure with Twitter, such as "Is Twitter dead?" "Do you need a new social platform?" "Twitter has no freedom of speech, how should it be corrected?" This kind of soul torture has caused a heated discussion among push friends for a while, and some netizens have joked that you should buy Twitter.

Just this past April 4, Musk transformed into Twitter's largest external shareholder, SEC 13G documents show that Musk holds 9.2% of Twitter's shares, about 73.48 million shares, about 4 times the 2.25% of Twitter founder Jack Dorsey.

On April 5, the latest SEC13D filing showed Musk's transition from "passive holding" to "aggressive investment." On April 10, Twitter CEO Parag Agrawal tweeted that Musk has decided not to join our board, and this dramatic reversal could mean that Musk has bigger ambitions (to acquire Twitter) and is plotting a "game of thrones."

On April 14, Musk responded to a fan's offer to "buy Twitter" by offering to buy Twitter for $54.20 per share, saying the social media company should be privatized.

In fact, Musk has long been premeditated for the acquisition of Twitter stock, and Musk has begun to buy Twitter stock at the end of January. As a KOL with more than 80 million followers on the platform, Musk's influence cannot be ignored, and his number of fans ranks in the top five on the Twitter platform, second only to Bill Gates, Obama and others.

But it is precisely because it is too influential that the SEC has repeatedly filed lawsuits against Musk for publishing Tesla's business information on Twitter, and although Musk has relented, Twitter is still his channel to announce the latest developments of companies such as Tesla and Space X.

Judging from the disclosure of the documents submitted, Musk has bought Shares in Twitter before making these remarks, and even has been in a low-key layout for the first time. According to regulatory documents, Musk began buying Twitter shares as early as January 31 this year, and the buying operation continued until April 1, with the purchase price range of $32.8 to $40.3, lower than twitter's current price of $47 per share.

After two consecutive purchases, Musk spent $2.64 billion to take control of 9.1 percent of Twitter, surpassing the 8.79 percent of investment banking firm Vanguard Group to become Twitter's largest shareholder. 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.

So why did Musk attack Twitter at this time, we may analyze the following three reasons.

First: It is because Twitter itself has a problem, giving Musk an opportunity, in fact, Twitter, which bears the aura of a "social leader" similar to Facebook, has actually lacked charm in the capital market.

The market is wondering if Twitter's gameplay is right, because its content doesn't seem to be as "toxic" and fallen as short videos, and the way it is governed seems to lack power.

Founded in March 2006, Twitter landed on the New York Stock Exchange on November 7, 2013, and rose sharply on the first day of trading, closing at $44.9 on the day, up 73% from the issue price of $26 and reaching a market capitalization of $31 billion. This shows that Twitter was a hit at the time.

However, after more than 8 years, in March 2022, Twitter's stock market capitalization was still at the level of about $31 billion. During this period, Twitter used to "dive" in share price, creating a "dismal" offer of $13.7 per share in April 2016.

Second: It's because Musk wants to take the right to free speech into his own hands. Although Twitter has shown that even if Musk is the majority shareholder of Twitter, it will not have privileges. However, we still need to pay attention to the fact that Musk's proposal and voting results will account for a heavier proportion after becoming a major shareholder. And this will also allow Musk to further get what he wants to achieve.

In November last year, Tesla CEO Elon Musk invited netizens to vote on Twitter to jointly decide whether he should sell more than $20 billion worth of Tesla stock and pay taxes. Twitter users said "yes" to this, and Musk cashed out $5 billion in November. In December last year, Musk said that in the future, dogecoin will be used to buy some Tesla peripheral products, and Dogecoin once soared 33%, a 24-hour increase of more than 20%. Driven by such a huge dividend, Musk must have wanted to eat the big bread of Twitter and let it operate for itself.

Third: Probably trying to avenge his good friend Dorsey, Musk and Twitter's former CEO Dorsey are good friends, and for years, Dorsey and Musk have often praised each other on social media. At an event earlier this year, Dorsey also asked Musk, who has more than 31 million followers, how to make the platform better.

But although Jack Dorsey is the founder of Twitter, he holds very few shares and has weak control over Twitter. U.S. hedge fund giant Elliott began an offensive in March 2020 to oust Dorsey. Elliott founder Paul Singer called on Dorsey to resign as Twitter or Square's CEO before reaching an agreement with Twitter management, which dorsey stepped down in November.

And less than five months after Dorsey stepped down, in March of this year. Musk tweeted in support of Jack Dorsey's continued role as Twitter's CEO. Musk wrote: "I just want to say that I support Jack as CEO of Twitter, and Dorsey has a good heart."

At present, musk and Twitter's tug-of-war is still continuing, but it is worth noting that Musk's acquisition road may not be smooth, first of all, for Tesla, if Musk continues to sell intensively, then it is very likely to "sell" Tesla. Musk could face charges as well as penalties. A few years ago, Musk was punished by the U.S. Securities and Exchange Commission for his remarks about taking Tesla private, and eventually settled with huge compensation.

Second, Twitter is already looking for ways to deal with Musk. Recently, some former shareholders of Twitter have begun to sue Musk, accusing him of manipulating the stock price for improper benefits.

And, just today, Twitter said the company's board of directors has decided to adopt a time-honored "The Rights Plan" to avoid hostile takeovers of the company and wants to block billionaire Musk's offer to take the company private.

The "shareholder rights plan" launched by Twitter this time is essentially a kind of "Poison Pill Plan", and its official name is "equity dilution anti-acquisition measures", which refers to a company encountering hostile acquisitions, especially when the shares held by the acquirer have reached a certain proportion, the original shareholders will issue new shares at a low price in order to retain their controlling rights. The purpose is to reduce the proportion of shares in the hands of the acquirer, but also to increase the cost of acquisition, so that the acquirer can not achieve the target of holding.

This anti-takeover measure was legalized in 1985 in a Delaware court in the United States. In 2005, when Sina faced the Shanda acquisition, it adopted the poison pill plan. In the end, Shanda had no choice but to give up Sina.

In addition, there is also the latest media news that Twitter has hired JPMorgan Chase and Goldman Sachs as advisers, and Musk has hired Morgan Stanley as his financial adviser. JPMorgan Chase is helping Twitter negotiate with potential buyers, including tech-focused private equity firm Thomas Bravo.

Some analysts said that Twitter's introduction of JPMorgan Chase may have been deliberate, because the largest U.S. bank in assets and Musk's electric car giant Tesla are involved in the lawsuit, some of which are related to Musk's misrepresentation on Twitter in 2018 to take Tesla private.

Although we don't know what his real intentions are at the moment, it is clear that musk's war without smoke to "block" Twitter will not end easily.