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Elon Musk’s Attempted Twitter Takeover

Watching the richest person on the planet attempt to take over one of the largest social media platforms to ever exist can be a mind-boggling experience. 

Last week, Elon Musk put forth a substantial offer to buy 100% of Twitter (TWTR) and take the company privately, reporting that he believes the company needs to be “transformed.”

Musk opines that the social media company needs to go private because it can “neither thrive nor serve” free speech in its current state. This comes a little over a week after Musk revealed his 9.1% stake in the company.

Previously, the Tesla CEO has criticized the social media platform publicly, polling people on Twitter last month about whether the company abides by free speech principles. He also shared his considerations about building a new social media platform.

A Securities and Exchange Commission filing revealed that Musk offered to acquire all unowned Twitter shares for $54.20 per share, valuing the company at $41.4 billion. The offer represents a 54% premium over the price the day before Musk’s Twitter investments, and a 38% premium over the day preceding Musk’s public announcement of the investment.

Musk commented that the cash offer was his “best and final offer,” according to the SEC filing, adding that if it was not accepted he would have to reconsider his position as a shareholder. 

“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 said in the letter to Twitter Chairman Bret Taylor. “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.”

Following Thursday of that week, Twitter shares closed down 1.68% and Tesla stock dipped more than 3.6%.

Twitter CEO Parag Agrawal has reportedly attempted to assuage employee fears in the wake of Elon Musk launching a hostile $43 billion attempt to take over the social media platform. 

During an all-staff meeting on Thursday, Agrawal said Twitter’s board is considering Musk’s offer and will respond in the best interest of company shareholders. When an employee suggested that Elon Musk’s aggressive acquisition bid felt like a hostage situation, CEO Agrawal dismissed the notion.

During a talk at TED2022 on Thursday, Musk claimed that he is not interested in acquiring Twitter to profit off of it, even saying that he is unsure that he’ll be able to buy the company. 

“This is not a way to sort of make money… it’s just that I think 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,” Musk said at TED2022. 

On Friday, Twitter responded

Although the board has not rejected Mr. Musk’s offer, it responded via a defensive tactic known as a “poison pill.” A poison pill aims to effectively prevent Mr. Musk from owning more than 15 percent of Twitter’s shares. The plan was put in place to fend off Musk, who owns around 9% of Twitter shares. This substantial measure would make it considerably expensive for Musk or anyone else to increase their stake in the company to 15% or more. If that threshold were to be crossed, the board could inundate the market with discounted shares that Musk wouldn’t be able to purchase, diluting his stake. 

It’s a defensive move, and it gives the board more time to consider Musk’s offer, as it has not been rejected, yet. 

Since that week, Musk has been racing to secure funding for his $43 billion bid to buy Twitter. Morgan Stanley, the investment bank working with Mr. Musk on the potential deal, has been calling banks and other potential investors to shore up financing for the offer. Sources claim that Musk is first focused on raising debt and has not yet begun to seek equity financing for his bid.

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