Such battles on social media may be unusual when considering a takeover of a massive company, but Musk himself is unusual, said Cary Cooper, a business professor at Manchester Business School. “He’s not a traditional businessman,” he says. “He is a man who is quite creative and quite innovative. He is a unique guy and does things in a way that a normal businessman would not do. He doesn’t play the normal games an entrepreneur would play.”
On April 15, the board of Twitter activated an emergency financial aid: the poison pill. Also known as a limited-time shareholder rights plan, the poison pill invited shareholders to increase their investments in Twitter to reduce Musk’s ability to build his stake into a controlling stake. Any attempt to get his share of more than 15 percent would require Musk to negotiate with Twitter’s board.
Activating the poison pill led to the swift hostile takeover, but Musk’s offer never went down. On April 21, Musk outlined how he had obtained the $44 billion in cash needed to fulfill his offer. Morgan Stanley and other companies offered to back Musk’s bid, while paying about $21 billion of his own estimated fortune of $263 billion. The filing put flesh on the bones of what had previously been a speculative offering — and indicated how seriously Musk wanted to take Twitter private.
The confirmed funding reportedly prompted some of Twitter’s shareholders, who were more agnostic about Musk, to petition the company to listen to him. Meetings reportedly took place over the weekend and Twitter’s board of directors met on April 25 to recommend the deal to shareholders. It was a quick and surprising turnaround. “There was so much skepticism and cynicism on Friday, and now it seems almost a foregone conclusion,” said Vasant Dhar, a professor of information systems at NYU Stern. Musk’s quick moves have left other potential bidders stuck in catching up. But the deal appears to have passed the money test, at least for Twitter’s board of directors, as “the board’s fiduciary responsibility is to get the most value for shareholders,” Galpin says. “Of course there are questions about what he will do with the company if he takes control of the company. He needs to do more than just add an edit button.”
By keeping the company private, Musk could make the changes he wants much faster, without responding to public markets. “I also want to make Twitter better than ever by extending the product with new features, making the algorithms open source to increase trust, defeat the spam bots and authenticate all people,” Musk wrote in Monday’s press release.
“I think he played it brilliantly,” says Dhar. “You should have expected the response we got: ‘Musk is a megalomaniac and he does it for self-promotion.’ But I actually think there is a lot more to it than that.”
The purchase may be subject to regulatory oversight. While it’s unlikely there’s an antitrust issue, the Securities and Exchange Commission may still dispute Musk’s disclosures along the way. “You could ask a court to order the deal based on the fact that it was wrongfully filed,” Pritchard said. “He did not submit his initial commitment in a timely manner, then he submitted the wrong form because he really intended to influence management all the time,” he suggests. However, that would require proving the damage caused by those violations. Shareholders could file private lawsuits, but would likely only succeed in getting more money from Musk in the deal. And the SEC is unlikely to shut down the transaction because of the damage shareholders could do.
This post Elon Musk reaches deal to buy Twitter for $44 billion
was original published at “https://www.wired.com/story/elon-musk-buys-twitter-deal”