Elon Musk has cornered Twitter and will win no matter what

Elon Musk wants to buy Twitter for 43 billion dollars, a few days after having betrayed his promise by leaving the board of directors of the social network. The outcome of his attack is still unknown.

Update April 15, 7:30 p.m.: As anticipated in this article, Twitter has activated an emergency measure to prevent a hostile takeover by Elon Musk. Businessman does first damage.

Original article, published at 10:30 a.m. on April 15:

Is Twitter ” taken hostage “, as some employees have feared since April 14? One thing is certain, for the social network, the gamble attempted by Elon Musk is extremely dangerous. The boss of Tesla and SpaceX, shareholder of Twitter with 9.2% of the shares for a few weeks, announced the same day his intention to get his hands on the remaining 90.8%, in order to privatize the social network. A real earthquake for the company, which completely lost control of a situation it thought was under control.

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Will Twitter give in and let Elon Musk privatize it? Can he be satisfied with a “no” and resume his life as before? Barring an incredible surprise, it looks like Elon Musk will win the battle either way. The businessman may never be the owner of Twitter, but the standoff leans in his favor.

Elon Musk has a “plan B” for Twitter

Let’s be honest, Elon Musk is probably not expecting to receive the “go” from Parag Agrawal, the Twitter boss who had welcomed him to his board of directors before Elon Musk planted him six days later. If Elon Musk’s offer is attractive ($43 billion, or $54.20 per share), Twitter, which officially says it is thinking about making the best decision for its shareholders, is unlikely to accept the offer. Elon Musk.

Some very large shareholders, such as the Kingdom of Saudi Arabia, have already said no publicly. Elon Musk publicly gets mad at them, denouncing the strange links between their interests and their vision of freedom of expression.

Chance of the calendar, Elon Musk was the guest of a TED Talk on April 14. He confirmed what seems obvious: his “final offer” is not one, there is a plan B. A “no” will not stop him, Elon Musk wants Twitter.

Elon Musk puts pressure on Twitter

How can Elon Musk rock Twitter? Ironically, you just have to go to the social network to get an idea.

On Twitter, the businessman explains on several occasions that, legally, the management of Twitter has a duty to make decisions that do not disadvantage its shareholders. And precisely, his proposal to buy back shares at 54.20 dollars each, against 45.08 dollars at the current price is, according to him, the best option for shareholders. In other words, Elon Musk is setting the stage for a possible negative response from Twitter. He explains that the company could be sued by its shareholders and, Trojan horse, guess who is one of the biggest shareholders of Twitter: Elon Musk.

Legally too, the board of directors of Twitter does not have the right to refuse the offer of Twitter under the pretext that it does not like Elon Musk. He needs justifications, such as doubts about the businessman’s ability to finance. Even if Elon Musk does not have sufficient cash reserves, he has tens of billions at his disposal, can sell Tesla shares and will obtain bank loans if necessary. Even if Twitter refutes the situation of ” hostage taking “, reality is approaching.

A “poison pill” to block the predator?

What’s going to happen ? After turning down Elon Musk’s offer, which may not be the last, Twitter doesn’t have many options to avoid a doomsday scenario of Elon Musk buying up a lot of stock, creating alliances and taking control of the business without asking anyone’s advice. The economic press has been talking about a mechanism for a few hours: the poison pill, also known as the “ poison pill “.

What is the poison pill? This emergency device would prevent a large shareholder from buying shares, by limiting Twitter’s access to the public market. Twitter stock could take a major hit, but Elon Musk would be greatly slowed down in his objective of taking control of the social network (he could not negotiate individually with the other shareholders to buy their shares). This scenario does not please him, he has already indicated on Twitter that he would act against the shareholders and could therefore be challenged in court. The leaders of the social network know this and, even if they mentioned its use on Thursday, would like to avoid it.

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Parag Agrawal, the CEO of Twitter who had hoped to make an ally of Elon Musk. // Source: Google Cloud / YouTube

How will this end?

Will Elon Musk ever own Twitter? At present, this possibility should not be ruled out. Company management can come to the conclusion that this is a good option and put in place safeguards to maintain control under the leadership of Musk, who has said he is open to leaving shares to a maximum of former shareholders, after having privatized Twitter.

In the event that the standoff continues, Elon Musk seems in any case best placed to win. Twitter will be attacked if it refuses or if it uses the poison pill (which can make him money), Elon Musk will try to destroy Twitter’s reputation and could sell his shares to hurt the company and, in the best case for Musk, he will end up getting his hands on it. on the social network, in one way or another. No scenario allows Twitter to quickly emerge a winner from this story. The company is going to live through difficult times.

Finally, let’s discuss another possibility that seems incredible to us: if the attack becomes too strong, Twitter could be forced to turn to a player more powerful than Elon Musk and sell itself to him. Google, Microsoft, Oracle… Only a tech giant could buy it out in cash and guarantee it some form of independence, while Elon Musk wants to transform it into a social network of “absolute freedom of expression”, without moderation.

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