Buy, sell or control?
The talk of Silicon Valley and Wall Street elites this weekend was Elon Musk’s next move on Twitter. “This process is going to be extremely disruptive, and it’s going to take a long time,” said a former Twitter executive with a heart-to-heart mentality. Musk’s next move could be any of the three scenarios above, a mix of them, or something else entirely.
Twitter’s board approved the poison pill on Friday afternoon. It’s a common way for public companies to protect themselves from investors like Musk. Musk offered to buy Twitter for $54.2 a share, which is expected to cost a total of $43 billion, and the passage of the poison pill suggests the board doesn’t think it’s a good price. The bid represents a 38% premium to Musk’s first disclosure of his holdings, but is nearly a quarter less than Twitter’s stock market value last July.
We made reasonable guesses about the future course of events based on conversations with analysts, Twitter employees and former employees. But speculating on Musk’s actions is hard, after all, he joked about taking his company private. He is the center of it all.
1. Musk buys more shares
Speaking at TED last Thursday, Musk said he had a “Plan B” and said the $54.2 per share offer was his “best and final” offer . But as the richest man in the world, it’s certainly possible that Musk will continue to press. Maybe he needs to sell Tesla shares or take out a loan to get the money, for which he said he has hired Morgan Stanley as a consultant. His proposal has received a lot of support on Twitter, which is important for a heavy Twitter user like him with 81 million followers. A considerable number of Wall Street analysts who follow Twitter’s stock think his offer is a good one.
Analyst Michael Nathanson, a keen-minded observer of the digital media space, said: “We don’t think shareholders or the board ultimately want to negotiate in a way that is neither an outright acceptance nor an outright rejection, but we would urge them to accept the offer and run road.”
2. Musk abandons acquisitions
As it turns out, he was serious about what he said was “the best and the last.” The event was an expensive digital performance art, and he was already enjoying himself. Now that Twitter’s stock is up, if he sells his stake slowly and cautiously, he could get off the market with a gain of $500 million or more. That’s not bad either.
3. Musk forms an alliance
Musk could work with another or several wealthy individuals, or institutional buyers such as private equity firms, to share the financial pressure. It also helped to quell a criticism of Musk’s move. Early Twitter investor Fred Wilson tweeted on Thursday: “Twitter should not be owned by one person.” He believes that Twitter, as one of the most active social platforms today, should not be controlled by a single force.
4. Musk is in the race, but Twitter still doesn’t want to sell itself
Musk’s bid may not be the last hostile offer to Twitter in the near future. Thoma Bravo, the private equity firm of billionaire Orlando Bravo, is actively considering an offer, according to the New York Post. Twitter has been the target of all parties, most recently investment firm Elliott Management aggressively taking a stake in 2019. Twitter has a long and tortuous history of being considered for acquisition, mostly for cultural reasons rather than its financial performance.
5. Twitter finds a savior
A common defense against “barbarian” investors is the poison pill. Another approach is for the company to find a preferred acquirer that will keep the company’s current trajectory and management intact. That’s also what could happen if Musk continues to pressure Twitter. If Musk leaves, but another buyer suddenly jumps in, it could go down that path.
Twitter seems to think the whole thing isn’t over yet. After hiring Goldman Sachs as an adviser, Twitter reportedly hired a second firm, JPMorgan. If it doesn’t think it needs it, it won’t find itself more banks.
6. Musk learns from Trump to build another social platform
He’s tired of playing around with Twitter, but is still determined to realize his vision of free speech. (He agrees with conservatives that Twitter and other social media platforms unfairly impede free speech). He used his deep pockets to create his own social media platform and compete with others such as Trump’s Truth Social.
This is the least likely scenario, as Truth Social struggled at launch, which shows how hard it is to build a Twitter competitor from scratch. Then, as Morningstar analyst Ali Mogharabi put it: “If he can actually raise $43 billion in cash to buy Twitter, if he gets turned down, he can actually still try to use that money to create a similar social media platform.”
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-did-musk-deal-with-twitters-poison-pill/
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