By Emel Akan
Tesla and SpaceX CEO Elon Musk made a bid on Thursday to take Twitter private for $54.20 per share, or around $43 billion in cash, after rejecting a proposal of a board seat.
Musk’s offer, which is 18 percent higher than the last closing price, is under consideration, the board said.
Adam Candeub, law professor at Michigan State University said that the forces of the status quo would try to figure out how to stop this takeover from happening. Candeub was the acting head of Department of Commerce’s National Telecommunications and Information Administration under President Trump. And he has long been critical of Section 230.
“Twitter’s owned by shareholders and the directors have to act in a way that’s in their best interests, not in the way that allows them to keep control of the corporation,”Candeub told The Epoch Times.
“If they turn down a very favorable price, there will be dereliction of their legal duty and there could be lots of legal consequences,” he added.
In a letter to Twitter Chairman Bret Taylor, Musk stated that the social media firm “needs to be transformed as a private company.”
“My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,” Musk said, threatening that he may consider divesting his current stake in the company.
“This could possibly drive the stock price down and disappoint Twitter shareholders,”Ali Mogharabi, senior equity analyst at Morningstar, wrote in a note.
“We believe the probability of Twitter accepting it is likely below 50%,” he stated. “However, we think the board may also be pondering whether it should discuss leadership changes, such as replacing CEO Parag Agrawal, with Musk as that may lessen the likelihood of Musk selling his shares if the bid is rejected.”
If Musk’s offer is turned down, Mogharabi said, he may still try to launch a similar social media site to rival Twitter.
Musk’s offer came just over a week after announcing a 9.2 percent ownership in the company.
A senior executive at an investment management firm who wished to remain anonymous said the Twitter shareholders have a lot to think about.
“You’re staring down the barrel of a bear market, recession, or worse. And someone comes along and gifts you 50 percent gain on your shares,” he said, asking “What would you do?”
“He’s already driven their share price higher by double digits since he announced his stake,” he added. “So, the major shareholders—not the back room digital monitors but the Blackrocks and Vanguards of the world—have a lot to ponder.”
The Vanguard Group, Morgan Stanley, BlackRock, and State Street are among the largest shareholders of Twitter.
Musk said he was offering to buy “100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced.”
Speaking at the TED2022 conference on April 14 in Vancouver, Musk said he has a “plan B” if Twitter board declines his offer.
“My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said. “I don’t care about the economics at all.”
Musk’s letter to Taylor made it clear that he wants to shake up Twitter’s free speech policies.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk wrote in the letter.
“However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company,” he continued.
“Twitter has extraordinary potential. I will unlock it.”
Musk purchased a 9.2 percent interest in the social media platform for $2.89 billion. His acquisition was made public on April 4. Tesla’s CEO who is a prolific Twitter user, has recently expressed his dissatisfaction with the social media platform’s rules.
Before becoming a shareholder in the company, Musk accused Twitter of “failing to adhere to free speech principles” and stated that he is considering creating a new social media site.
Last month, Musk polled his 80 million Twitter followers, asking if the platform adhered to free speech values. He received 2 million votes, with more than 70 percent of those who voted no.
Twitter shares surged by nearly 20 percent since the billionaire became the top shareholder.
Musk has claimed that the platform hinders free speech, especially since Parag Agrawal replaced Jack Dorsey as CEO. Musk already stated that he didn’t agree with Agrawal’s appointment.
Twitter stated that the proposal will be reviewed by its board of directors, and that any response would be in the best interests of “all Twitter stockholders.”
Musk turned down a seat on Twitter’s board last week, which would have capped his ownership to a maximum of 14.9 percent in the firm.