The world’s richest man and Tesla founder Elon Musk made global news recently when he announced an intention to purchase the social media website Twitter. The company is publicly traded, so this was require Musk to purchase 100 percent of the available stock in order to take the company private again in a hostile takeover, which he had already begun by purchasing roughly 9 percent of the company’s shares prior to his announcement. In a subsequent interview, Musk went into depth about his reasons, stating his belief that Twitter should be managed very differently because it has become a vital part of free speech and American democracy. This is an apparent contrast to Twitter’s recent policy of removing controversial tweets and users from its platform.
While this was initially seen as an attention grab or outright troll, Musk raised eyebrows when he made an informal offer of $43 billion, which was significantly higher than the current stock price of the company. Due to the board of Twitter’s fiduciary responsibility to its shareholders, it is forced to seriously consider this type of offer. However, many onlookers still doubted Elon Musk’s sincerity, due in large part to his lack of liquidity since much of his net worth is associated with his stock in Tesla and rocket manufacturer SpaceX.
Now, Elon Musk is making news again bypublicly filing the precise financial details of a proposed $46.5 billion hostile takeover of Twitter with the Securities and Exchange Commission. The bulk of the funding for the proposed takeover would come in the form of two massive loans from the bank Morgan Stanley as well as a $21 billion commitment from Musk himself. There are also rumblings of the potential for funding agreements from other private companies, such as Yahoo owner Apollo Global Management.
All of this shows not only that Musk is serious about his intention to purchase Twitter, but also that the company may actually be obtainable. According to Twitter spokesman Brenden Lee, “[t]he Board is committed to conducting a careful, comprehensive and deliberate review to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.” It is impossible to know what the result of these machinations will ultimately be, but some shareholders with Tesla and SpaceX have voiced concern as the management of Twitter would presumable detract from Musk’s ability to manage those two companies, both of which he serves as CEO.
Dil Bole Oberoi
