Tag Archives: elon musk offers to buy twitter

Elon Musk, Twitter

Everybody either Hates or Loves that Elon Musk bought Twitter: Everybody’s Wrong

Even for Twitter the reaction is bizarre to the extreme

Wow. The big news came, simple and straightforward, on Monday afternoon. Eastern time. From the official press release: “Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction”

What came next was a tsunami of extreme emotions – mostly negative by casual observation. The happiest seemed to be MAGA dreamers that somehow think that Elon Musk will be all about enabling Trump and his minions to get back into social media shenanigans, a.k.a. “free speech’. Which is, to put it mildly, doubtful.

To get the color of this intense reaction here are just a few example headlines:

Oddly, the most ferocious detractors of this deal are the “left” and those that are also believing the nonsense that somehow this is a big win for the right and for Trump (huh?) and therefore – the friend of my enemy is my enemy, or some such thing.

‘A Real Threat to Democracy’

We All Know Elon Musk Is Buying Twitter To Help Him Get Away With Stock Fraud, Right?

“Why the oligarch Elon Musk is a threat to independent media’

and so on

Then the oddly stilted semi-jubilation from the right:

https://twitter.com/crimsonjester/status/1518787555835056129?s=20&t=LX-W1cn7nl8vtM6CQdzixg

Naturally, Trump says he would not tweet again even if invited since he has his own useless and failed app. This is the basic problem of 90% of the reactions – the more extreme they are the more ridiculous the assumptions as to what Elon Musk will actually do.

Bots, often controlled by foreign actors, were the issue in 2020, not the tweets by actual people

If you were on twitter in 2020 during the run-up to the election, or in 2016 for that matter, the biggest issue was not the real tweets from Trump and others of his ilk, no matter how stupid and deranged those tweets were.

It was, instead, the thousands of fake accounts amplifying the “message” and creating a wall of lies and disinformation. Those bots would attack any anti-Trump or Pro-Biden (or Pro-Hillary) tweets and applaud all pro-Trump messages with likes, re-tweets etc. And they still exist to today.

They were ridiculously obvious as fake, for anyone who bothered to check, but the massive number and the fact they they were allowed to run-rampant made this stupid, primitive method of perverting actual free speech and behavior bizarrely successful.

This is just one small point. The idea that Elon Musk bought Twitter so that he can re-instate Trump and his bot-army goes against literally everything that is known about him as well as what he has actually said.

Of course anyone can say that Musk is not sincere, etc. But stating unequivocally that he will defeat the bots is a step in the right direction. Bots and fake accounts are epidemic in all social media and are likely tolerated for nefarious reasons – the least negative of which would be that it’s too expensive to care.

The fact that he would make mention of the “shadow ban council” also shows an awareness of the problems associated with algorithms that have agendas that punish and shadow ban at the whim of those in charge as being important- < it is > – that’s a huge plus, at least in terms of transparency or dialog about actual problems that exist.

And let’s not forget that Elon Musk is not beholden to a specific political party (everyone accuses him of being on the other side or of being a libertarian, and that maybe a good fit for some of his expressed views, but he has not specifically aligned himself with a particular party).

What this all boils down to – as alluded to in the title, is that there’s a strong sense that nearly all these opinions and much of the outrage is dead wrong about what will actually happen.

Can Elon Musk ‘Fix’ Twitter?

It would be equally insane, however, to assume that anyone, even the world’s richest person, can just buy Twitter, or any other huge tech platform (Web2 platform) and then fix all the problems.

Can anyone even agree on what Twitter is or what it should be? And so many of the problems that twitter has are baked-in to the whole huge-Web2-platform-defacto-monopoly thing that makes life online so frustrating and, at times, hopeless.

But what a private company, run by a “brash” gazillionaire is, at least, is something different. Well, sort of. That’s where it comes down to a probably crazy experiment in just how much worse can it get… Zuckerberg, Bezos, the Google Twins? Tough acts to follow?

Some have pointed out that Elon Musk will have even more power and control over Twitter than, for example, Zuckerberg has over FaceBook-er-Meta. And that is, for some, a scary and infuriating concept. On the other hand, what if more control, in the hands of someone who at least appears to have a sincere desire to see Twitter succeed as a “Town Square” and communication tool for humanity is actually what it takes to get things on the road to betterville…?

It’s hard to give a guy with $350 billion the benefit of the doubt, I get it

In other words, instead of seeing Twitter as a battleground between left and right, where one or the other should “win”, there is at least the possibility that Elon Musk sees it as much more than that.

That he sees it a bit closer to what it was created to be – a tool for people to communicate is a novel way.

Call it micro-blogging or shit-posting or memeifycation of life or what you will, the idea is, that if it were possible to create a tool that did indeed allow and even encourage actual online free speech is one that could at least be an experiment worth trying.

Is ‘this guy’ the right person to do it? Maybe not. Is a public company, with the explicit primary goal of enriching shareholders a better way? Not so far in any known example.

In fact this seems to be the ‘secret’ that is hiding in plain sight, that an altruistic goal by a super-rich private individual who decides to take over a social media company, to try to do something never done before – might actually be exactly what it takes to begin a new way for people to communicate online.

And, regardless of how skeptical we may be of that idea, the fact is that extreme change is urgently needed – leads to the reality that anything new and different should at least be tolerated and tried before it is condemned and attacked.

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Elon Musk, Twitter

Elon Musk owns Twitter after $44 Billion: What’s Next?

Video

Freedom of Speech is declared driving force for Takeover

Twitter Inc. announced that it has agreed to be acquired by an entity that is wholly owned by Elon Musk. The news comes after it was widely leaked that negotiations were underway over the weekend and that a deal was imminent.

Going forward the company will be privately held and current stockholders will be compensated at $54.20 for each share of common stock that they own as of completion of the deal. This represents a 38% premium over the closing price on April 1st when Musk’s 9% stake was announced.

The board voted unanimously to the proposal and, though subject to the approval of Twitter’s shareholders, and applicable regulatory approvals the agreement is expected to go through in 2022.

What will follow is unknown, but speculation is rampant

Since the announcement on April 1st that Elon Musk had purchased approximately 9% of Twitter and this Saga began, there has been a busier than usual frenzy of speculation regarding the possibility that has now come to pass.

On the most superficial level, there was an odd kind of measured jubilation on the political Right, with speculation that Musk might re-instate Trump and others who have been permanently banned (although Trump himself indicated that he would decline if invited back) and a sense of horror on the Left – with an implied mistrust of the world’s richest human, connecting this situation to ongoing debates over wealth taxes and economic inequality overall.

On a deeper track are those closer to the situation – such as Jack Dorsey, who expressed support and openly criticized the current board and public structure in elucidating tweets, such as the one below.

Looking back at some of the harmony and love shared over bitcoin and other major topics an alliance, or at least a consulting status for @Jack could be amazing in terms of what could come of this – a private Twitter with Musk at the helm, in terms of a new direction for social media and all online business and how they evolve going forward.

While it may seem presumptuous to think it won’t be a disaster, there are deeper issues that would indicate that a lot more thought might have gone into this than a superficial look reveals.

Elon Musk has proved, and explained to anyone that will listen, that his motives and goals for any business endeavor are in a new category of entrepreneur, and his success, often against incredible odds, are a testament to the power of this mindset.

With Tesla, he took on nothing less than the most powerful, entrenched (and arguably corrupt) special interest group in history, the fossil fuel industry, and somehow, due perhaps as much to timing as to any particular strategy or plan, prevailed.

That this takeover could mark the beginning of real change in “Web2” and social media, regarding of the risk of a private individual excepting near absolute control, it is a welcome change, based on the reality that the status quo, at Twitter and basically all the so-called internet giants could not be any worse.

Let’s hope that the public and very visible lead up to this deal will be followed in the near future by a continuation of that openness and that changes and plans will be announced as they happen, which would be entertaining at the least, and exhilarating at best.

There’s a lot more to unpack in this, not just in the reactions and opinions that will surely flood now that the next step is upon us. but in a fruitful and valuable deeper look into the real motivations and potential of this new deal.

For that, please stay tuned, and for now, please let me know what you think about Twitter’s decision and new owner.

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Business, Elon Musk

Do poison pills work? A finance expert explains the anti-takeover tool that Twitter hopes will keep Elon Musk at bay

Poison pills usually work, but Elon Musk appears undeterred. screenshot from china launch video

Tuugi Chuluun, Loyola University Maryland

Takeovers are usually friendly affairs. Corporate executives engage in top-secret talks, with one company or group of investors making a bid for another business. After some negotiating, the companies engaged in the merger or acquisition announce a deal has been struck.

But other takeovers are more hostile in nature. Not every company wants to be taken over. This is the case with Elon Musk’s US$43 billion bid to buy Twitter.

Companies have various measures in their arsenal to ward off such unwanted advances. One of the most effective anti-takeover measures is the shareholder rights plan, also more aptly known as a “poison pill.” It is designed to block an investor from accumulating a majority stake in a company.

Twitter adopted a poison pill plan on April 15, 2022, shortly after Musk unveiled his takeover offer in a Securities and Exchange filing.

I’m a scholar of corporate finance. Let me explain why poison pills have been effective at warding off unsolicited offers, at least until now.

What’s a poison pill?

Poison pills were developed in the early 1980s as a defense tactic against corporate raiders to effectively poison their takeover efforts – sort of reminiscent of the suicide pills that spies supposedly swallow if captured.

There are many variants of poison pills, but they generally increase the number of shares, which then dilutes the bidder’s stake and causes them a significant financial loss.

Let’s say a company has 1,000 shares outstanding valued at $10 each, which means the company has a market value of $10,000. An activist investor purchases 100 shares at the cost of $1,000 and accumulates a significant 10% stake in the company. But if the company has a poison pill that is triggered once any hostile bidder owns 10% of its stock, all other shareholders would suddenly have the opportunity to buy additional shares at a discounted price – say, half the market price. This has the effect of quickly diluting the activist investor’s original stake and also making it worth a lot less than it was before.

Twitter adopted a similar measure. If any shareholder accumulates a 15% stake in the company in a purchase not approved by the board of directors, other shareholders would get the right to buy additional shares at a discount, diluting the 9.2% stake Musk recently purchased.

Poison pills are useful in part because they can be adopted quickly, but they usually have expiration dates. The poison pill adopted by Twitter, for example, expires in one year.

A successful tactic

Many well-known companies such as Papa John’s, Netflix, JCPenney and Avis Budget Group have used poison pills to successfully fend off hostile takeovers. And nearly 100 companies adopted poison pills in 2020 because they were worried that their careening stock prices, caused by the pandemic market swoon, would make them vulnerable to hostile takeovers.

No one has ever triggered – or swallowed – a poison pill that was designed to fend off an unsolicited takeover offer, showing how effective such measures are at fending off takeover attempts.

These types of anti-takeover measures are generally frowned upon as a poor corporate governance practice that can hurt a company’s value and performance. They can be seen as impediments to the ability of shareholders and outsiders to monitor management, and more about protecting the board and management than attracting more generous offers from potential buyers.

However, shareholders may benefit from poison pills if they lead to a higher bid for the company, for example. This may be already happening with Twitter as another bidder – a $103 billion private equity firm – may have surfaced.

A poison pill isn’t foolproof, however. A bidder facing a poison pill could try to argue that the board is not acting in the best interests of shareholders and appeal directly to them through either a tender offer – buying shares directly from other shareholders at a premium in a public bid – or a proxy contest, which involves convincing enough fellow shareholders to join a vote to oust some or all of the existing board.

And judging by his tweets to his 82 million Twitter followers, that seems to be what Musk is doing.

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Tuugi Chuluun, Associate Professor of Finance, Loyola University Maryland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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