Last week, Elon Musk’s regulatory filings with the SEC revealed that he bought a slightly over 9% stake in Twitter. According to a recent SEC filing, he has now made an offer to privatize Twitter at $54.20 per share.
Musk seemed okay with allowing some shareholders to keep their stake in Twitter if he can get enough shareholders to take him up on the offer. He also proposed that taking Twitter private should be entirely up to the shareholders, not the board of directors.
Some shareholders may not bite. Saudi Arabia’s Prince Alwaleed bin Talel, Chairman of the Board for Kingdom Holding Company (KHC), said that $54.20 per share was lower than Twitter’s intrinsic value. KHC holds a 5.2% stake in Twitter.
Out of Twitter’s current major shareholders, only Vanguard Group has a bigger stake than Elon Musk does with a 10.29% stake.
Investors, media outlets, and activists expressed concern about Musk’s takeover attempt. He has expressed support for “free speech” and his move might have been sparked by Twitter’s alleged censorship of some political opinions.
Some of the critics said that Musk might give Donald Trump his Twitter account back even though Musk hasn’t stated that he plans to. Donald Trump’s Twitter account was suspended soon after the January 6 riot in which Trump supporters attempted to overturn the results of the 2020 presidential election.
Others cited Musk’s ongoing disputes with the SEC. Last year, the SEC warned Musk that his tweets allegedly violated an earlier settlement of charges that he manipulated Tesla’s price by saying that he could take Tesla private. At least one Tesla investor also filed a lawsuit claiming that Musk and Tesla ignored the settlement’s requirement to retain an attorney to vet Musk’s tweets. Tesla regards Musk’s tweets as official communications.
Additional problems include at least one hacking ring that uses a social engineering attack to gain access to the Twitter accounts belonging to Musk and several other prominent individuals like Barack Obama and Bill Gates. They used their access to spread cryptocurrency-themed scams. Investigation into the massive hack and fraud led to the arrests of three individuals living in Florida and the UK.
Some investors have already filed a lawsuit alleging that Musk delayed a required regulatory disclosure regarding the size of his stake in Twitter.
After his stake became public information, Twitter had made an offer to give Musk a seat on its board of directors. Musk seemed amenable to that idea at first, but later backtracked.
Musk has floated the idea of turning Twitter’s headquarters into a homeless shelter, complaining that “nobody shows up anyway.” Some employees have already quit, apparently reluctant to work for Elon Musk.
If Musk’s plan to privatize Twitter goes through, he will spend $43 billion in cash on the deal. It’s unclear whether he will fund it with a loan or sell Tesla stock to raise the cash. According to Forbes, he is currently the wealthiest person on the planet with a net worth of over $260 billion as of April 14 — even allowing for the amount of Tesla stock he has put up as collateral for loans. He could do it.