ELON MUSK’S ANOTHER UNPRECEDENTED MOVE
Update- Friday ,22 April
In a new filing with the SEC, Musk said he has procured USD 46 billion to endow his offer of $54.20 a share.
Morgan Stanley, Bank of America, and several other banks have promised to lend Musk an additional $25.5 billion, against in part by some of Musk’s Tesla shares, according to the filing to SEC.
Musk averred in his filing that Twitter has not yet officially responded to his gratuitous offer. He “is seeking to negotiate a definitive agreement for the acquisition of Twitter,” stated in the filing, “and is prepared to begin such negotiations immediately.”
Elon musk CEO of Tesla Motors, Chief of space x and the boring company recently announced that he has bought a 9.2 per cent stake in Twitter, making him the 2nd largest shareholder in the Company. Paras Aggarwal CEO of Twitter offered musk a seat on the board of directors but musk declined the offer. Elon musk according to his recent statements want to buy 100% of the outstanding shares of the company.
Elon musk’s take over of the company is not sitting well with the board of directors. Musk has offered to acquire Twitter for roughly 43 billion dollars which amounts to 54.20 USD per share .currently Twitter share is trading at around 45 USD. This bid has prompted Twitter to adopt
‘poison pill’ (officially known as shareholders rights plan) to prevent “hostile bid” from musk. A poison pill means when a company issues new additional stock to dilute the ownership of shareholders. Musk may also be willing to pledge his current stake if necessary, a move that could raise several billion additional dollars, according to the New York Post report. The announcement of the poison pill has been approved by the board last Friday while the stock market was closed, Twitter on Monday provided more details in a regulatory filing that no doubt it’s trying to fend off Musk’s $43 billion takeover bid.
When a poison pill is approved by the board of directors Any investor that builds up a stake up to 15 per cent without the board’s approval. If Musk were to increase his stake to the 15% threshold, then The board can grant shareholders as of April 25 the right to buy one-thousandth of a share of preferred stock for each common share they own, for $210, which will make it virtually impossible to acquire total outstanding no of shares of Twitter. Adoption of the poison pill often results in lawsuits against companies accusing that the board is acting against the interest of shareholders to keep their position.
Other private-equity firms have also expressed their interest in participating in a deal for Twitter, people familiar with the matter told Reuters on Monday without naming the firm.
Goldman Sachs, the prestigious investment bank has advised twitter to not approve the musk’s offer. The board has retained Goldman Sachs to advise in its tussle with Musk. Musk has retained Morgan Stanley, a rival of Goldman Sachs, as his advisory bank.
Musk tweeted “If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty,” the billionaire reacted to the press articles on Twitter. “The liability they would thereby assume would be titanic in scale.”
In a recent interview with Ted talks musk stated that twitter’s algorithm must be open source as it allows transparency between the Platform and the users. He also stated in the same interview that free speech must be allowed on Twitter but hate speeches and other forms of provoking tweets that might result in violence must be moderated the real question is can we rely on AI to determine the nature of tweets.
Lately, musk seems to be very angry at the board of directors, adding to his previous statements “It would be utterly indefensible not to put this offer to a shareholder vote. They own the company, not the board of directors”
SO WHAT ELON MUSK’S NEXT MOVE WOULD BE?
This all now has become a game of high stakes between the world’s richest man and Twitter, with this upcoming week might be an eventful one as we expect to formally hear from both the parties on their next move, With the poison pill making it harder for musk’s takeover of Twitter. It will be challenging for Musk, he may decide to withdraw his bid or make changes to his bid and exercise the still-significant influence he would have on the company as one.