Elon Musk’s new troll is buying Twitter — will it work?

Say what you will about Elon Musk, but that guy is really attached to the weed number. I mean, in his failed attempt to take Tesla private—failed at least in part because he hadn’t “secured financing”—Muske offered $420 a share. And now he’s bidding on Twitter for $54.20, which values ​​Twitter at $43 billion. After all, Musk said “this is no way to make money” for him in an interview with Chris Anderson. “I don’t care about the economy at all,” he said. The man likes what he likes.

And right now, this prolific shitposter loves Twitter. Not enough to talk about the business stuff he’s going to do to make it better, mind you — but enough to be the very first meme activist investor. A hostile takeover! God, I feel I’m alive.

“You do wonder if he’s really thought about this.”

“You kind of wonder if he’s put a lot of thought into this one,” said Stephen Diamond, an associate professor of law at Santa Clara University.

For those of you not terminally poisoned by an obsession with corporate finance, a hostile takeover is when someone offers a lot of money to buy a company without the cooperation of the company’s management. Usually, when someone wants to buy a company and take it privately, they consult with the management of the company and come up with a price and try to make people happy. You know, quite a courtship ritual.

A hostile takeover is more, well, more hostile – and also more unusual. Management is bypassed. “If you take things like this seriously, you arrange financing in advance,” says Diamond, noting that Musk hasn’t done that. Morgan Stanley advises Musk, and I imagine they talked to him about this, but whether Musk was listening, no one can guess. Musk confirmed in his TED Talk that he could afford everything, but doesn’t want to. (Musk also says, “The goal is to retain as many shareholders as legally allowed.”)

You may remember last week, when Musk revealed his 9 percent ownership of Twitter, turned Twitter into a meme stock and boosted his stock by 27 percent. He would then become a board member – although that was subject to an agreement that he would own no more than 15 percent of the shares. At some point this weekend, he changed his mind about the board position, and now he’s doing what, even to him, is a truly remarkable corporate troll.

Musk also said he tweets from the toilet

On April 13, Musk, Twitter’s second-largest shareholder, Twitter sent a note with the offer of $54.20 per share. That number is a 54 percent premium to the stock price before Musk started buying stock and a 38 percent premium to the stock price on April 1, which, as fate would have it, was the last trading day before Musk announced his Twitter ownership.

In the SEC filing for the offerMusk indicates his primary interest is “freedom of speech.” “I think it’s really important that there’s an inclusive arena for freedom of expression,” he said in today’s TED Talk. “Twitter has become a kind of de facto city square. So it’s just really important that people have both the reality and the perception that they can speak freely within the bounds of the law.” Musk also said he tweets from the toilet.

Musk has always had a comprehensive view of the First Amendment, and I’m not entirely sure he’s aware that it only applies to government censorship of speech, but I’m also not sure if it matters to him. cares. In his SEC filing, he writes: “I invested in Twitter because I believe in its potential to be the platform for free speech around the world, and I believe that freedom of expression is a societal necessity for a functioning democracy. .”

Okay, so why the takeover? Well, “Since I made my investment, I now realize that the company in its current form will not thrive and will not serve this social necessity. Twitter needs to be turned into a private company,” he writes. What these transformations could be, can anyone guess – Musk has been suggest an edit buttoncomplaining about “top” Twitter accounts not posting enough and suggest a special layer of authentication for Twitter Blue in between visits to Berlin fetish clubs† Product suggestions are all well and good, but I don’t really see how that ties directly into the bottom line.

“This is not a threat.”

This letter is like a three-tweet thread, tops, but Musk has a long history of favoring private companies because, as writes his biographer Ashlee Vance:“Musk prefers to operate in secret.” Going public with Tesla, a financial necessity at the time, “represented something of a Faustian bargain,” writes Vance in his 2015 book, which Musk reviewed.largely correct† And “hey, I want to keep Twitter private because I’m a control freak” probably doesn’t feel right for a takeover bid?

Anyway, on file, Musk says he doesn’t want to play footsie with Twitter. He makes this offer, and if the deal doesn’t work, “I would have to reconsider my position as a shareholder,” he writes in a “voice script” attached to the application. “This isn’t a threat, it’s just not a good investment without the changes that need to be made.”

Musk also says this is his last offering, although John Coffee of Columbia University, a corporate governance expert, notes that Musk is not tied down. (Coffee thinks Musk could very easily get money to fund a bid.) It’s possible this is just another way to pressure the Twitter board into doing what it wants, Coffee says. Musk said in his TED Talk that he has a Plan B, but that he will discuss it another time.

The filing includes a script to talk to shareholders to convince them to sell. It’s a fairly simple script, though I have no idea if non-Muske shareholders will find it compelling. By the way, that’s what’s happening now: Musk is trying to convince shareholders to sell him their share of the company. Twitter shareholder and Saudi prince Al Waleed bin Talal Al Saud has already rejected the offer and tweeted about said rejection† Messy!

While I’m not sure how much money he wants to buy Twitter with, I think he can sell another chunk of Tesla stock or try to get financing through a bank. Even then, I’m not sure the offer is good enough for most shareholders, as the stock was worth $70 a year ago.

Looking at Twitter’s share price, I don’t think the market believes in Musk’s offer either. When a company gets a takeover offer, the stock usually trades around the price of that offer. Twitter is currently trading well below supply, at $45.99 at the time of writing.

I wonder if Dorsey is involved behind the scenes

That’s strange. Offers like these put the company in the game and open the door to other offers. I can imagine a scenario where a company like Salesforce, who was considering a Twitter acquisition in 2016, surpasses Musk and walks away with Twitter. Disney also once considered Twitter but walked away because “the nausea is extraordinary‘ said Bob Iger. (I hear Chamath Palihapitiya also made a proposal at the time.) Rumor has it that then-CEO Jack Dorsey advocated for Twitter to go private with these bids.

And this is where things get a little curious because, besides being famous a Bitcoin maxi and CEO of a completely different company, Block, Dorsey is friends with Musk and considers him the ideal Twitter user. I wonder if Dorsey is involved behind the scenes – after all, he seemed to have been pushed out by Elliott Management, another major Twitter shareholder, in favor of Parag Agrawal, the current Twitter CEO.

There is another complicating factor. On the board of Twitter is a man named Egon Durban, who is the co-CEO of Silver Lake, an investment firm you may remember from hits like “working with Elon Musk to take Tesla private in 2018.” It’s hard for me to say offhand what this means for Musk’s bid… but it seems a lot of these guys are getting beer together.

If someone else is bidding on Twitter, that’s probably fine for Musk, who makes a ton of money — even if he says he doesn’t mean to make money, and he doesn’t care about the economy at all. But with the stock price well below Musk’s bid, it suggests the market doesn’t think there’s going to be a bidding war for Twitter. (If shareholders thought that was a possibility, the share price would top Musk’s offer.)

Twitter – above all, it is loved by internet-addicted billionaires, journalists with brain worms, and the cryptocurrency community in general – is a managed social network as well. It’s culturally highly visible as 24-hour TV news channels can lazily use tweets to make television, but it’s not widely used and is currently absolutely being killed by both TikTok and the company formerly known as Facebook.

If this is really Elon’s attempt to save free speech, you have to wonder why he isn’t looking at other, bigger options. On the other hand, this is a truly groundbreaking troll – and maybe that’s all it needs to be. I expect Jack Dorsey to laugh his head off.

With reporting by Alex Heath and Andrew Hawkins.

Correction April 19, 11:30 a.m. ET: Removes erroneous reference to Libra.

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