Wen 丨Toby Lu
After reaching the top of the world's richest man, Tesla CEO and SpaceX founder Elon Musk is not "settled", he has set his sights on the well-known social media Twitter, saying that he will spend $43 billion to buy Twitter.
On April 14, a 13D document released by the U.S. Securities and Exchange Commission (SEC) showed that Elon Musk proposed to buy Twitter for $54.20 per share in cash on the 13th, and the transaction amount will reach $43 billion and take it private.
But Twitter management is unhappy, and the latest news shows that Twitter is implementing a "poison pill plan" that aims to defend against and resist Musk's acquisition.
As one of the world's largest social networking platforms, Twitter has 210 million monthly active users in its 16 years of existence, and by the end of 2023, it is expected to exceed 310 million monthly active users. Since then, it has become one of the most important information exchange and dissemination platforms in the world.
In the face of such a public company, why did Musk spend $43 billion on a privatization acquisition? After the takeover offer, Twitter management has undergone a huge change of attitude, can the "poison pill plan" stop Musk from being a "barbarian" outside the door?
01
This was a premeditated acquisition
It is not too much to say that Musk is a big Internet celebrity in the Internet circle, he has more than 80 million fan subscriptions on Twitter, and often makes some "amazing" remarks on Twitter, either for Tesla product marketing, or for comments on current global hot events, causing global netizens to watch and eat melons.
As a veteran Twitter user, Musk has published more than 17,200 statuses on Twitter in the past 11 years, and even often acts as a product manager for Twitter, advising and complaining about its functions, such as setting up identity badges for Twitter Blue premium subscribers, banning advertising, lowering fees, and accepting Dogecoin payments.
Maybe it's because of the depth of love and the depth of responsibility. Beginning in March, Musk began to make intensive disgruntled remarks about Twitter, such as: "Is Twitter dead?" "Do you need a new social platform?" "How should Twitter correct its lack of free speech?"
On March 25, Musk 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% believe that Twitter did not follow this principle.
There are also many netizens who leave messages under Musk's tweets and begin to encourage, suggesting that Musk directly spend money to buy Twitter, or re-establish a social media platform himself.
This may be exactly the situation musk wants to see, providing an excuse for his "prepared" acquisition, he said to the outside world: "Twitter has extraordinary potential, I will release these potentials."
In fact, Musk bought Twitter's stock in January this year, spending $3 billion in two consecutive months of buying, becoming Twitter's largest shareholder, with a shareholding ratio of 9.2%, which has surpassed all individuals and investment institutions. After Musk announced the news, Twitter's stock price ushered in an unprecedented surge, with the highest increase of more than 27%.
Just last Thursday, Musk officially announced plans to buy Twitter for $54.20 per share in cash, valuing it at about $43.4 billion. He said it was his highest offer and his last offer. If the offer is not accepted, he may sell his Twitter stock and exit altogether.
Instead of rushing to respond, Twitter management issued a statement saying the board would carefully consider the offer and determine a course of action that would be in the best interests of the company and shareholders.
Subsequently, Twitter management invited Musk to join the company's directors, but on April 9, Musk announced that he would give up his board seat on Twitter.
Morketing learned that if Musk becomes a director, his shareholding will not exceed 14.9% according to the regulations, and we speculate that this may be the reason forcing Musk to give up his board seat.
02
With a $43 billion bid, why didn't all parties agree?
In the face of "barbarian" Musk's privatization demands, Twitter management gradually made it clear and adopted a rejection of the tender offer.
The concrete measure was the beginning of a program called the Poison Pill Project, a defensive strategy developed in the 1980s to protect businesses from "attackers."
For example, when the acquirer's shares have reached 10% to 20%, the company will issue a large number of new shares at a low price in order to retain its controlling interest, so as to achieve the purpose of not allowing the acquirer to achieve the purpose of controlling.
The more famous cases of the "Poison Pill Project" are: the 2004 stock acquisition of Liberty Media Group in Merrill Lynch, the acquisition of Sina by Shanda Network in 2005, and the case of Ninth City in 2009.
The implementation of the "poison pill plan" is not necessarily successful, its effect is to deter hostile acquirers, or to reduce the number of hostile acquirers, and there is a level of capital game with acquirers.
Morketing inquired that twitter's stock price is at $4.8 billion, according to the latest data, and Musk has called out a $5.42 billion privatization acquisition, why don't Twitter parties agree?
First, Twitter shareholders believe that Musk has underestimated the true value of his platform.
Also as a shareholder of Twitter, the Saudi prince has stepped forward to make it clear that he will not agree, according to Arab news reports, saudi prince Al Waleed bin Talal Al Saud has successively held 5.2% of Twitter since 2015.
After receiving information about Musk's privatization offer, he tweeted: "Given Twitter's growth prospects, I don't think Musk's $54.2 purchase price offer 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. ”
This statement has been made clear, the Saudi prince believes that Musk's acquisition price is not sincere enough, is underestimating the intrinsic value of Twitter.
Second, the real purpose of Musk's privatization offer is not clear.
Whether it is the Twitter side or the outside world, the real purpose of Musk's purchase of Twitter is unknown. Is the world's richest man a whim, or is twitter really going to be "reinvented"?
Musk's own external explanation is that he wants to have an "inclusive free speech stage", and he has been attacking the free speech of the Twitter platform, and the suspension of excessive speech has made many groups unable to speak out. He argues: "It's not a way to make money. My strong intuition is that having a public platform that is the most trusted and broadly inclusive is extremely important for the future of civilization. ”
Is the purpose of acquiring Twitter really like this? There is also speculation that Musk wants to control the Twitter platform for long-term publicity and public relations purposes.
Musk has been sparing no effort on Twitter to stand for Tesla, SpaceX, and even Dogecoin. Just last December, Musk released a Tweet claiming that Tesla could support Dogecoin for payment transactions in the future, which led to a 33% increase in Dogecoin in 24 hours.
It can be seen that Twitter, as one of the most active social media platforms in the world, who controls Twitter controls the direction of global discourse power, as an opinion leader in the technology circle, it is excellent to control a media platform that has been vocal for a long time.
There is also speculation that it was because of musk's feud with the U.S. Securities and Exchange Commission (SEC), which led to his own suspension from Twitter in order to prevent the SEC's operation.
Third, after the privatization, Twitter's cultural values changed.
Some Twitter employees will worry that Twitter has become a private company after being privatized by Musk, the original Twitter corporate culture will be changed by Musk, and on the one hand, the culture refers to the treatment of minority employees, Tesla has a "previous crime" in this matter, in February this year, Tesla was sued by the California Department of Fair Employment and Housing for suspected racial discrimination.
Concerns in the above three areas may lead Tony Twitter to eventually adopt a refusal attitude on the takeover offer.
03
Where does Twitter go from here?
If In the end, Twitter is not successfully privatized by Musk, it means that Twitter will continue to follow the path of independent development.
According to its fourth quarter and full-year 2021 financial reports, Twitter's revenue last year was $5.08 billion, up 37% year-on-year, with a net loss of $221 million; fourth-quarter revenue was $1.57 billion, up 22% year-on-year.
In other words, Twitter's current state is still losing money. The reason for this is that the ad click-through rate of its core business is declining, with total Twitter ad engagements in the fourth quarter down 12% year-on-year, due to the difficulty of attracting users to click on ads.
In terms of product model, Twitter's main advantage is text-based social media, but looking around, Twitter's competitors are numerous.
On social media, competitors include Meta (Facebook); competitors in graphics include Instagram and snapchat, a photo-sharing app; and TikTok in short video.
And Twitter's number of users has lagged behind, the platform now has 217 million users, while Instagram has 1.4 billion users, and latecomer TikTok announced in September last year that the number of global active users has exceeded 1 billion, snapchat has also 500 million users, compared with them, the volume gap is very large.
From the perspective of user information acquisition, the short video content information threshold is much lower than that of graphics, and Twitter's moat threshold is that it is still an important platform in the field of global Internet information distribution, in the face of competitive pressure, Twitter must transform, increase the number of users, enhance the platform's commercial self-hematopoietic ability, these are imminent needs.
04
summary
In the face of such a buyer who does not play cards according to common sense, Twitter hesitated from the beginning to the final boycott, can Musk break the "poison pill plan"? Can you finally get the world's most influential social media platform in your pocket? The eyes of the world are watching Musk's next move.
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