Mr Market will have a long weekend to consider whether it thinks Elon Musk’s bid for Twitter will make it over the line or not as the New York Stock Exchange will stop trading for Good Friday tomorrow.
It is just one of the many quirks surrounding the potential acquisition, with the Tesla founder and CEO offering to buy the San Francisco-based social media platform for the equivalent of $54.20 per share (an offering some have suggested is a wink to the 4:20 weed slang).
That all-cash consideration of $43bn would be a 38% premium compared to when Musk’s first investment was first publicly known at the start of April, so it’s definitely nothing to sniff at. However, it is well below Twitter’s all-time high of more than $77 per share, which was recorded in February last year.
Also in Twitter’s defence is the fact that new CEO Parag Agrawal has hardly had any time to make his mark on the business after succeeding Jack Dorsey last November. As recently as 5 April, Agrawal was publicly welcoming Musk to Twitter’s Board of Directors, a group which Dorsey is still appointed to.
That move fell through and it was announced on 11 April that Musk would no longer be joining the chief decision markets at Twitter. Now, only three days later, we have Musk’s decision to try and buy the company.
We know that he has hired Morgan Stanley (which is also a major investor in Twitter) as his financial advisers for the transaction, and we know that he has “no confidence” in Twitter’s management team, but he does believe that the platform of 217m daily active users has “extraordinary potential” to be the “platform for free speech around the globe”.
To achieve this, Musk claims Twitter, which listed on the NYSE and snubbed NASDAQ in 2013, must be taken private, something he apparently told Twitter management about last weekend before it was announced he would not join the Board of Twitter. If Musk’s “best and final” offer isn’t accepted, he has warned that he will “reconsider” his 9.1% stake in Twitter, which has been incrementally and quietly amassed since 31 January
More details around the plans are promised in further regulatory filings. Until then, Musk’s vision of Twitter under his control looks extremely vague. For its part, Twitter has acknowledged his offering, promising to “carefully review” the “unsolicited” proposal. There’s no doubt that Chairman Bret Taylor, who joined the Board in July 2016 and is the co-CEO of Salesforce, has a lot of thinking to do.
Ironically enough, Musk would have at least three high-profile CEO roles if he buys Twitter. Dorsey, who is also CEO of Block, faced an investigation into the use of his time after activist investor Elliott Management Corp. launched a campaign against him when he mooted moving to Africa to run both Twitter and Block (then known as Square) in 2020. This issue was resolved in March 2020, but Dorsey did eventually leave the company as CEO.
Perhaps Twitter’s future will be decided in Texas and not Africa after all?
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