You probably saw this massive bombshell drop on Twitter earlier…
Musk’s best and final offer was to pay $54.20 per share for 100% of Twitter, and said that if his offer was not accepted he’d have to reconsider his position as a shareholder, according to an SEC filing.
Musk recently disclosed a 9.2% stake in Twitter, but he rejected an offer to join its board of directors and criticized the social media platform in tweets.
He wrote in the filing that he’d want to “transform” the social media platform as a private company.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk wrote. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form.”
Musk said the takeover attempt is “not a threat, it’s simply not a good investment without the changes that need to be made.”
This was a distinct possibility which surfaced when Musk turned down a spot on Twitter’s board on Saturday.
This was Musk’s letter that went along with the 13D filing signaling an intent at a takeover…
Chairman of the Board,
I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.
However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.
As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.
Twitter has extraordinary potential. I will unlock it.
So what he’s done here is to put Twitter’s management and board in a tough spot.
$54.20 is a reasonable price for the stock. Twitter stock hasn’t been that high since October of last year, and it’s been on a severe glide-path downward since the COVID hysteria, which boosted all of the Big Tech companies’ stock prices, began to die down a year ago. There is no reason to believe Twitter’s stock is going to reverse that decline organically. If you’re a Twitter investor this is about as good a price as you’ll find.
Twitter’s shares zoomed up to about $54 in pre-market trading, but they’ve fallen since. Why? Twitter’s management hasn’t rejected the offer but they’ve signaled they’re about to…
Well this is awkward: TWTR board hired Goldman to "advise" it that the @elonmusk $54.20 offer is too low. Only problem: Goldman has a SELL rating with a $30 price target. Oops. pic.twitter.com/ViQXnXBD3C
— zerohedge (@zerohedge) April 14, 2022
The board is set to meet this afternoon. But here’s the problem. If Musk refuses to up his offer and they can’t recruit somebody else to put in a $43 billion bid to buy the company, you run into some fiduciary problems for Parag Agrawal, the company’s 37-year-old CEO.
They won’t, of course, but some shareholders could immediately file a lawsuit demanding those resignations and things could get interesting. Not to mention the proxy fight sure to come.
And Musk, who could afford to lose his $3 billion investment in Twitter, wouldn’t have to if he ejected. He could dump his stock and still likely make a profit, though once he dumped it Twitter would be dead in the water.
I had an American Spectator column about this on Wednesday, noting that Musk’s Twitter adventure is just one data point among many in the category of failing Left-run institutions ripe for disruption, destruction or takeover. A hostile bid for Twitter is merely laying down a roadmap for others, even if Musk doesn’t actually end up with the social media app.
And nothing stops him from building his own, of course.