Table of Contents
What’s happening?
- Tesla CEO Elon Musk is making his “best and final” offer to buy 100 percent of Twitter in an updated 13D filed Thursday with the SEC.
- He’s offering $54.20 per share in cash. Musk’s wealth hovers around $260 billion.
- Twitter’s market valuation is about $37 billion. Musk’s offer values Twitter at about $43 billion.
background
- Earlier this month, Musk revealed through an SEC filing that he had bought a 9.2% stake, worth nearly $3 billion, in Twitter.
- This had made him the biggest shareholder in the company, ahead of the 8.8% stake held by the Vanguard Group, 8.4% held by Morgan Stanley, and 2.2% stake held by Twitter co-founder Jack Dorsey.
- A day later, on April 5, Twitter’s chief executive officer Parag Agrawal had said in a note on the platform that Musk would join the company’s board.
- On April 11, Agrawal sent out another note saying Musk had decided against this.
- He had also hinted of “distractions ahead” and that the company executives should “tune out the noise” and stay focused on the work.
So what now?
- Tesla CEO Elon Musk has launched a hostile attempt to buy Twitter for $43 billion,
- Saying it needs to be transformed into a private company to become a platform for free speech.
- Musk, the company’s largest individual shareholder, offered to acquire all of Twitter’s remaining common stock at $54.20 per share in a “non-binding proposal” he sent to Twitter’s Board Chairman Bret Taylor on Tuesday.
Free speech
- In his letter to Taylor, the self-described free speech absolutist said he had invested in Twitter as he believed in its “potential to be the platform for free speech around the globe”.
- Musk said he realised since making his investment that Twitter in its current form would neither “thrive nor serve” as a tool for free speech — and so it “needs to be transformed as a private company”.
54% premium offer
- The SpaceX founder’s purchase offer was at a 54% premium over the day before he 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,” he said.
No confidence in the management
- “If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.
- This is not a threat, it’s simply not a good investment without the changes that need to be made. And those changes won’t happen without taking the company private,” he said in the texts.
What twitter has to say?
- Late in the night, Twitter confirmed it had received “an unsolicited, non-binding proposal” from Musk and said,
- It would carefully “review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders”.
What is hostile takeover?
- The term hostile takeover refers to the acquisition of one company by another corporation against the wishes of the former.
- The company being acquired in a hostile takeover is called the target company while the one executing the takeover is called the acquirer.
- In a hostile takeover, the acquirer goes directly to the company’s shareholders or fights to replace management to get the acquisition approved.
The problem
- Elon Musk may have to shell out huge amount in case of Hostile Takeover.
Q) The name of a company can be changed by?
- An ordinary resolution by shareholders
- A special resolution by shareholders
- Approval of the government
- Special resolution with government’s approval
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