With Twitter, is Musk serious

Image source: Visual China

Twitter's board of directors voted unanimously before the weekend break to approve the "poison pill" plan to block Elon Musk's newly proposed acquisition of the company. Almost 10 days ago, Musk announced that he already owned 9.2 percent of the shares of the world-famous social media, making him Twitter's largest shareholder.

Although Musk has long been not only an active user of Twitter, but also an active critic, Twitter's board of directors has at one point welcomed and even excited about his possible addition, as it has led to an increase in stock prices and led them to unrealistic imaginations about the future.

Musk's criticism of Twitter has focused on what he argues is unreasonable and unjustified in censorship of content carried out by the latter, and that such censorship is an interference and disruption of fundamental rights. At the end of March this year, on his Twitter account, Musk launched a discussion on the topic, and 70% of the 2 million participants echoed Musk's arguments and criticized Twitter. Musk, who has more than 80 million followers, then followed up with a tweet asking "Need a new social media platform?" His supporters said in comments that they wanted him to buy Twitter or start a new platform.

Now, the discussion seems like a hint of early release. Musk's filing with the U.S. Securities and Exchange Commission (SEC) revealed that he had already bought Twitter's stock on Jan. 31 this year and held it more and more in the next two months, and when a total of $3 billion was spent on it, he surpassed others to become Twitter's largest shareholder.

After the secret operation went public in early April, Musk was invited to become a member of Twitter's board of directors for a term through 2024. Twitter founder Jack Dorsey and president Parag Agrawal went on to extend a "warm" welcome to Musk.

Dorsey said in a tweet that he was "really pleased that Elon joined Twitter's board" — he affectionately called Musk by name. His praise could also be said to compliment Musk for "caring deeply about our world and the role Twitter plays in it."

Musk has also shown great interest in joining the board and exerting influence in it. On April 6, he filed a new petition with the SEC to change an earlier ruling against him that would allow him to become an "active" shareholder, which would give him a say in Twitter's operational decisions.

In fact, there have been some conservative members lobbying for this, such as their public proposal to Musk to restore former President Trump's Twitter account. Trump was ousted by nearly every social media outlet, including Twitter, in the wake of the congressional unrest in early 2020, and he and his supporters have been outraged about it.

However, Musk's application was not approved, and according to the SEC regulations, even if he joined the board, his authority would be limited, and he could not become the holder of more than 14.9% of the company's issued common shares during or for 90 days after his term. On April 11, Musk announced his refusal to join the board, and the market has a premonition that a new entanglement will soon arise between him and Twitter's board.

Two days later, Musk offered to buy Twitter at $54.20 per share, an amount higher than Twitter's current share price and above the price he last bought on April 1 when he bought Twitter stock. He will spend another $43 billion on this, a sixth of his existing $270 billion fortune.

Musk said his purpose was to unleash Twitter's potential, and in an email to Twitter's board, he considered his bid to be "the best and final," and he showed arrogance and aggressiveness from the biggest shareholder and potential buyer: "It's a high price, your shareholders will like it," and "If it's not accepted, I need to reconsider my position as a shareholder."

It was not expected that the honeymoon period with the world's richest tech businessman would be so short that the Twitter board of directors, within two days of Musk's takeover offer, urgently passed the "term shareholder rights plan" as a response to Musk's $43 billion "hostile acquisition plan".

Twitter's plan is that if anyone (currently actually refers specifically to Musk) acquires more than 15 percent of the shares without board approval, existing shareholders will be able to buy shares at a discounted price, diluting the stake in unpopular bidders (and, of course, Musk).

Twitter hopes to block the acquisition of the most active businessmen in the 21st century as it enters its third decade through the "poison pill" strategy of defending against "barbarians outside the door" that emerged in the 1980s. From its inception, however, this strategy, in addition to its effectiveness in deterring barbarians, has also been criticized for its factual use as a tool for business owners and managers to unilaterally consolidate their positions. Moreover, the possibility of subsequent legal proceedings will also reduce the efficacy of "poison pills".

Twitter may just be buying time and seeking higher bids, as musk has shown interest in buying. In fact, even if a one-year restricted equity plan has been announced, Twitter's board of directors does not reject the willingness to buy from elsewhere, and even one can boldly assume that it is not substantially opposed to Musk becoming the owner of Twitter with a more appropriate bid. Because historically, there have been more than one instance in the operation of the Poison Pill program that only delayed unpopular takeover offers, but did not prevent a final compromise from being negotiated.

Musk turned low-key after announcing the acquisition, and he did not express a positive opinion on the counterattack of Twitter's board, but only revealed that he already had "Plan B". In contrast to Twitter hiring Goldman Sachs and JPMorgan Chase to provide related advisory services for him, Musk has not explicitly pursued other actions to advance his announced acquisition plans. Instead, it has left market watchers wondering whether the much-hyped acquisition is real or the same as ever, just a Twitter-related storm set off by Musk.

After all, Tesla's world's first gigafactory in Shanghai has been shut down for nearly a month, which is the problem that Musk needs to spend more energy and patience to solve. (Fortune Chinese Network)

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