In a stunning, but not surprising, follow up to the prior episode in Elon Musk’s Twitter arc, the Tesla Billionaire’s refusal of a seat on the social network’s board has paved the way for his latest bold move.
Billionaire entrepreneur Elon Musk offered to take Twitter Inc. private in a deal valued at $43 billion, lambasting company management and saying he’s the person who can unlock the “extraordinary potential” of a communication platform used daily by more than 200 million people.
Here’s the SEC filing.
The world’s richest person said he’ll pay $54.20 per share in cash, 38% above the price on April 1, the last trading day before Musk went public with his stake. The social media company’s shares sank 1.1% to $45.33 in New York on Thursday, a sign there’s skepticism that one of the platform’s most outspoken users will succeed in his takeover attempt.
Reading between the lines, if the market’s concern that Uncle Elon won’t buy Twitter drove its stock price down, we can make two informed conclusions:
- Everyone knows Musk is right that Twitter can’t survive without the changes he’s proposing.
- Musk has forced Twitter into a position where the only way for them to survive is to let him buy them.
This is what fans of game theory – and the 1990s animated series Gargoyles – call a Xanatos Gambit.
And indications in the media today are that Twitter will choose to self-destruct rather than cede control a dirty infidel.
Elon Musk expressed doubt about whether he’ll succeed with his $43 billion offer to buy Twitter Inc. in his first public comments about the blockbuster deal.
“I am not sure that I will actually be able to acquire it,” the billionaire entrepreneur said Thursday at a TED event in Vancouver. Musk said he has a Plan B if Twitter rejects his offer, without offering more details.
Word through the grapevine is that Twitter has called an emergency all-hands-on-deck meeting for 5:00 Eastern tonight. And at that meeting, the company’s current leadership will decide their response to Musk’s hostile takeover attempt.
For a near-certainty, the board will decide to reject Musk’s offer.
But keep in mind that a board of directors can’t just do whatever they want. They have a fiduciary responsibility to their shareholders under the law.
If the shareholders believe that rejecting Musk’s buyout isn’t in their financial interests, they can overrule the board, or even appeal to the SEC.
And if it’s found that the board acted against the shareholders’ financial interests for ideological reasons, the board members could get in hot water with the feds.
Which brings us to Elon’s Plan B.
Musk really hasn’t made a big secret of it. If Twitter’s board rejects his offer, he’ll dump his 9% share of the company, which will tank the stock.
He who can destroy a thing, controls a thing.
Make sure to pick goods seats to watch the fireworks.
And don’t give money to people who hate you.
