It's not just a matter of whether Musk can afford it or not, and how much Twitter is worth.
I believe that many people hate one thing when using social media platforms, that is, the content they send is "clipped". However, as mediocre melon-eating netizens, we can only scratch our heads and think about which sentence is used incorrectly to resend. But Elon Musk, who loves to "get things done," doesn't, and his choice is to privatize Twitter.
On March 26, Musk tweeted, "Do [we] need a new social platform?" Netizens reacted fiercely to the vote he initiated, and some netizens suggested that Musk either buy Twitter directly or build a new platform himself.
Looking back, we can only say that netizens and Musk are "heroes who see a little the same thing, as early as before the release of that tweet, Musk began to buy a lot of Twitter stocks." According to the 13G filing released by the SEC on April 4, as of March 14, Musk held 73,486,938 shares of Twitter through the Musk Revocable Trust, equivalent to 9.1% of Twitter's issued common stock. In other words, Musk has become Twitter's largest individual shareholder. In addition, SEC documents also show that as early as January 31 this year, Musk bought 620,000 shares of Twitter at a price of less than $36.83 per share.
If Musk just wants to be a shareholder of Twitter, this matter is not enough to make almost the world's commercial and financial media rush to report, the incident was triggered by a document filed with the US Securities and Exchange Commission on April 14.
Tesla CEO Musk submitted a non-binding privatization proposal to the company on April 13 to acquire all of its unopened common shares of Twitter for $54.20 per share in cash, the documents show.
Whether this matter can be done or not is not for us to express for the time being. First, let's briefly outline the forces that currently have names in this "big drama".
A: Musk
B: Twitter's board of directors
C: Other shareholders of Twitter
D: JPMorgan Chase, Goldman Sachs
E: Morgan Stanley
The first move is the main player of the red team - Musk. In the finale interview at TED on April 14, he talked about the motivations for acquiring Twitter and the latest offer to be thrown. His gist was that the acquisition was intended to make Twitter a platform that could be more free-speech and fairer, and that he was not considering privatizing Twitter for economic purposes. For details, see the following figure.
Notably, according to Musk, the total amount of the entire transaction of privatizing Twitter is as high as $43 billion, while Twitter is currently worth $35 billion.
In addition, the documents submitted by Twitter on this day also show that Musk invited teammate E - Morgan Stanley, who provided advice for Musk. According to people familiar with the matter, Damo has sent a team of top technology bankers led by Michael Grimes.
Next, the main force of the blue side, the Twitter board of directors, organized a strong counterattack. The company announced on the 15th that all members of the board of directors voted unanimously to activate the "poison pill plan" to counter Tesla CEO Elon Musk's acquisition of Twitter.
The "Poison Pill Plan", also known as the "Shareholders' Equity Plan" or the "Equity Dilution Anti-Takeover Measures", is a defensive measure taken by the board of directors of a listed company to prevent hostile takeovers and dilution of shares. According to the plan, if Musk buys more than 15% of Twitter stock, other shareholders will be able to buy additional new shares at a discounted price, making Musk's equity diluted and the acquisition more expensive. Twitter said the plan does not affect the board of directors in negotiating or accepting acquisitions that are in the interests of the company and shareholders.
But Twitter's board of directors is certainly not alone, according to people familiar with the matter, after hiring Goldman Sachs to provide consulting services, they also hired a second investment bank, JPMorgan Chase, to "advise".
At this point, the main forces of the red and blue sides have been assembled, and the next step is a fight on the financial battlefield.
Daniel, an analyst at Wade Bush Securities, told The Associated Press that Twitter's "poison pill plan" was not surprising, "they are ready to fight Musk and win time for finding other potential buyers." Coffey, a law professor at Columbia University, said Musk could theoretically challenge the "poison pill project" with legal means, but "no court has won a similar lawsuit in the past 30 years"; incitement to Twitter shareholders to fire squid on the board is more feasible, but it is also bad for Musk.
Wait, the other party mentioned earlier has the power of names – what about the other Twitter shareholders? This part of the story is slightly more complicated.
On the evening of April 16, Musk said on Twitter that with the departure of Twitter founder and former CEO Jack Dorsey, Twitter's board of directors "collectively has almost no shares", and the economic interests of Twitter's board are inconsistent with shareholders.
Okay, so what exactly do the other shareholders on Twitter's board mean?
At the moment, one of the voices seems to be "more". For example, Twitter shareholder Saudi Prince Al Waleed bin Talal Al Saud refused. Waleed believes Musk's bid undervalued Twitter. He tweeted, "Given Twitter's growth prospects, I don't think Musk's $54.2 purchase price proposal is close to Twitter's intrinsic value." As one of Twitter's largest long-term shareholders, king holding company (KHC) and I rejected the offer. ”
Another voice didn't make it explicit, but some signs suggest they didn't rule out "selling someone else" to Twitter. Multiple sources, speaking on condition of anonymity, told Reuters that Thomas Bravo, a U.S. private equity firm that invests mainly in technology, has reached out to Twitter to express interest in making an acquisition offer. A private equity firm with more than $103 billion in assets under management is also considering acquiring Twitter, according to other sources.
Of course, even without considering that Musk has recently been embroiled in a lawsuit to "privatize Tesla fake tweets", it is very difficult to privatize Twitter. It's not just a matter of whether Musk can afford it or not, and how much Twitter is worth. A few years ago, companies like Disney and Salesforce also seemed to express interest in acquiring Twitter, but none of those acquisitions materialized.
Finally, to tell a small story of the acquisition of listed companies in the history of the United States, in the 1860s, Vanderbilt, the second richest man in the history of the United States, wanted to buy the Ili Railway, and in a short period of time, he bought 200,000 shares of the Ili Railway (a total of 250,000 shares). Who admitted that Daniel Drew, the largest shareholder of Ili Railway, while frantically printing new shares, while converting his convertible bonds into new shares, caused the Ili Railway stock to plummet for a while, and in a fit of rage, Vanderbilt took Drew to court.
In the end, the two sides reached a settlement, Drew was responsible for operating the market to pull the stock back to the price at which Vanderbilt bought, Vanderbilt gave up 100,000 shares to reduce his loss, and at the same time, Delu swallowed back 40% of the water-injected shares, becoming the largest shareholder of Ili Railway; and Drew made a net profit of $7 million and left Ili Company. You know, the $7 million in that era is hundreds of millions of dollars now!
This story tells us that no matter when, issuing new shares and diluting equity are excellent options to prevent acquisitions, and those who want to achieve the purpose of "forced buying" always have to pay some additional costs.