It is reported that on April 14, American Eastern Time, Twitter submitted a document to the Securities and Exchange Commission (SEC) of the United States. On April 13, Musk submitted a non binding privatization proposal to the company, and proposed to purchase all of Twitter's outstanding ordinary shares with cash of $54.2 per share, with a total price of $43 billion (about 274 billion yuan). Based on Twitter's closing price of $45.85 per share on Wednesday (13th), the acquisition premium is 18%. Twitter said it had received the offer from Musk and would carefully review the acquisition proposal.
It is reported that on April 15, Musk also launched a vote on Twitter entitled "The privatization of Twitter at a price of 54.2 dollars per share should depend on shareholders rather than the board of directors". At present, 10 hours before the end of the voting, more than 2 million people have voted, and more than 83% of them have voted in favour.
↑ Elon Musk, CEO of Tesla
Musk said that the quotation is the highest and final one. If not accepted, he will reconsider his position as a shareholder of Twitter. He said: "This is not a threat. If Twitter is not allowed to make important changes, then this is not a good investment."
Enthusiastic fans become the largest shareholder, and now plans to fully acquire
It is reported that Musk himself is a "fanatical Twitter user" who has more than 80 million followers on the Twitter platform. He has made sharp remarks on the platform for many times, which has attracted wide attention. Not long ago, Musk has purchased 9.2% of Twitter shares, becoming the largest shareholder of Twitter. According to the agreement, Musk will be appointed as a member of the Board of Directors under the condition that his shareholding does not exceed 14.9%. However, Musk later announced that he would give up his board seat, triggering speculation that he would continue to increase his shareholding and even buy Twitter.
↑ The vote launched by Musk on Twitter.
According to foreign media reports, Musk expressed his dissatisfaction with the current situation of Twitter in a letter to Brett Taylor, chairman of the board of Twitter. Musk said that he invested in Twitter because Twitter has huge potential, but the current model cannot maintain the rapid development of the company and assume due social responsibility, so the company must be privatized.
According to foreign media reports on the 15th, Musk also used fierce language recently to accuse the Securities and Exchange Commission (SEC), calling it "bastard". It is reported that in 2018, because of the release of "Tesla privatization" tweet, the SEC filed fraud charges against Musk, believing that the information released by Musk lacked factual basis. Musk said that when the tweet was released, the funds for Tesla's privatization were actually in place, but the SEC still launched an investigation. He thought he was "forced to settle" because he was threatened that if he did not do so, the bank would stop providing funds, which would make Tesla bankrupt immediately.
"It's like pointing a gun at the head of his child," Musk said. In order to save Tesla, he had to admit that he lied. It is reported that in this incident, Musk and Tesla each paid a civil fine of 20 million dollars, and Musk also resigned as Tesla's chairman. Another related order also requires Musk to obtain prior permission from Tesla lawyers when making Twitter and other public statements that may be critical to Tesla.
Extraordinary shareholders: refuse! Musk's offer is low
It is reported that Musk said on the 14th that he did not care whether Twitter made money and hoped to hold as many shares as possible, but he was not sure whether it could be successfully acquired. Ives, an analyst at Wedbush Securities, believes that the final outcome is likely to be that Musk has taken Twitter into his pocket. He said: "Twitter's board of directors may eventually be forced to sell Twitter." He believed that Twitter would be difficult to refuse Musk's offer, "this acquisition premium is difficult to see other bidders appear."
Timothy, senior lecturer in strategy and innovation at Oxford University's Said Business School, believes that the final result may be that he (Mask) retreats or Twitter shareholders do not approve. Timothy believes that it seems difficult to ensure that enough shareholders approve Musk's existing offer.
↑ Push the super shareholder and Saudi prince to reject Musk's proposal.
According to foreign media analysis, Mask's offer of $54.2 per share may be "too low" for Twitter shareholders or the board of directors. Although the offer is higher than that before Mask's purchase, it is still far below Twitter's high of $77.06 per share in February 2021. Although Mask, Twitter's current largest shareholder, wants to sell the company, other shareholders may not easily agree.
It is reported that Saudi Prince Walid, one of the largest shareholders, has rejected the proposal of Musk. He wrote on Twitter: "Twitter has a good growth prospect, and Musk's offer ($54.2 per share) is lower than Twitter's intrinsic value." It is reported that the Saudi prince and his 95% holding Kingdom Holdings bought about 5% of Twitter shares in 2015.
It is reported that according to insiders, Twitter's board of directors is considering using the "poison pill defense" strategy to resist Musk's takeover offer. It is reported that this strategy is also known as "anti takeover measures for equity dilution", which allows existing shareholders of the company to purchase a large number of shares at a discount price, thus diluting the acquirer's equity. It is a common strategy of American companies to resist hostile acquisitions.
Where to raise cash? Musk: I have "enough assets"
Some experts said that it might be difficult for Musk to come up with more than 40 billion dollars in cash. Robertson, a media research professor at the University of Virginia, said: "He (Mask) cannot have more than $40 billion in cash to complete his plan. Most of his assets are related to stocks.", Although Musk has just been rated as "the richest man in the world" with a net worth of more than 219 billion dollars, most of his assets are related to his Tesla publicly traded shares and his privately held SpaceX company.
According to foreign media reports, Musk now has about $3 billion of available funds. If he wants to raise tens of billions of dollars of additional cash to acquire Twitter, he needs to sell about 36.5 million Tesla shares, or more than one-fifth of his shares. However, such a sale may lead to a decline in Tesla's share price, and may also lead to questions about the CEO's commitment, financial and other aspects. According to the analysis, most of Musk's assets are related to Tesla shares and SpaceX.
In addition to selling stocks directly, it is reported that Musk can also use Tesla or SpaceX mortgages. It is reported that according to Tesla's policy, pledged shares can borrow up to 25% of their value. Since then, Musk has increased the number of his shares by exercising options. His 172.6 million shares are worth $170 billion, which means that he can theoretically borrow $42.5 billion through all pledges. Similarly, he could raise another $12 billion by fully mortgaging his SpaceX shares.
However, Kevin Kaiser, a professor at the Wharton School of Business at the University of Pennsylvania, believes that if Musk uses Tesla's stock, Twitter may still reject his proposal on the grounds of unreliable financing.
Musk said at this Thursday's TED event that he could "technically afford the purchase price" and that he "has enough assets". When asked what he would do if the Twitter board rejected his proposal, Musk said he had another plan. However, he did not disclose specific information about "another plan".
Expert warning: If Musk succeeds in acquisition, the consequences will be serious
According to foreign media reports, Musk said that he wanted to buy Twitter not to make money, but out of his belief. He also said that he hoped to open Twitter's algorithm and believed that Twitter should "very carefully issue a permanent ban and try not to delete content on the platform".
Foreign media said that many people believed that if Musk really took over Twitter completely, some "anti hate speech" measures might be canceled. Buqi, the founder of BotSentinel, an analysis service website, said: "If someone like Musk takes over Twitter, it will have a negative impact on the world." Buqi said that Musk's idea may make Twitter become a "quagmire of errors and false information" and have bad consequences.
Professor Cooper of Manchester Business School said that one of the important reasons why Musk wanted to buy Twitter might be that he needed a platform to act as his "microphone". He said: "I understand Mask's idea. As a maverick businessman, he needs a platform to let him freely express his ideas and views."
It is also reported that Twitter said that any response from the company would be in the best interests of "all Twitter (existing) shareholders". Twitter also added that if the transaction is finally completed, Twitter's common shares will be terminated in accordance with Section 12 (G) (4) of the Securities Exchange Act of 1934, as amended, and will be delisted from the New York Stock Exchange.
