So much has happened between Elon Musk and Twitter, and as of yesterday, even more has occurred. It all began with Elon Musk’s twitter account posting a poll, asking his followers if twitter upheld free speech on its platform. The conclusion between poll responders seemed to be that there was indeed an issue with Twitters ability to uphold freedom of speech. In response to this, as well as for his own personal motivations, Musk bought up nearly 10% – becoming the largest shareholder in the company. As a result of this Musk was offered a seat on the board of Twitter but declined as a strategic maneuver to avoid a rule which capped the amount of equity board members could own.
After this Musk made another major move, offering to outright purchase the company at $54.20 per share in cash. Twitter’s response was to adopt a “Poison Pill Strategy” – which gives existing shareholders the option to buy more shares at a lower price, effectively diluting a new hostile party’s ownership stake. Under the new structure, if any party acquires at least 15% of Twitter’s outstanding stock without Board approval, other shareholders will be granted the rights to purchase additional shares at a discounted price. As of yesterday, Musk appears to be planning his next move. One of his top options is what is called a “tender offer” which means to makes a direct appeal to shareholders to sell—or tender—their shares at a specific price. Many in the field believe this offer will go over, because in order to fulfill a tender offer, one would still need to have a negotiation with the board. Even if it all works out though, the sheer amount of money required to take Twitter private demands a large chunk of Elon Musk’s net worth – which is currently tied up in Tesla. What do you think about this back and forth between Twitter and Musk? And is this finally the end of the road?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.