With more than 80 million followers on his personal account, a large number of tweets and daily interaction, American entrepreneur Elon Musk, the richest man in the world at the moment of this writing with a fortune of more than 260 billion dollars, has been described as the number one “Twitter troublemaker.” Perhaps he was not contested in this title except by former US President Donald Trump, who was no less troublesome than him throughout his presidential term.
Therefore, it was not surprising that Musk’s tweets appeared at the end of March 2022, in which he launched a violent attack on the platform, which was buzzing with his tweets all the time, saying that he was “seriously” thinking about creating a new open-source social media platform that would allow greater freedoms of expression and provide less. of advertising and advertising.
This statement was made by Musk one day after an opinion poll he published on the same platform, in which he asked his followers if they believe that the Twitter platform is committed to freedom of expression, and the answer of 70% of the participants was “No.”
Free speech is essential to a functioning democracy.
Do you believe Twitter rigorously adheres to this principle?
— Elon Musk (@elonmusk) March 25, 2022
Many considered these statements to be the beginning of a great wave of hostility between Musk and Twitter, and a hint of the imminent establishment of a new social network to be added to the group of giant companies founded and run by the controversial billionaire. The biggest adventures in the technical world in recent years.
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blazing week
At the beginning of April, everyone was surprised by Elon Musk's announcement that he had purchased a 9.2% stake in Twitter, with a total value of about $2.89 billion, making him the largest external shareholder in the company's shares, exceeding 4 times the share of Twitter founder Jack Dorsey. which is 2.25%.
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Musk’s purchase of Twitter shares began gradually and unannounced from the end of January 2022 until the beginning of April, as he was buying daily between 370,000 to 4.8 million shares, at an average price of $ 36 per share, until the value of the shares that He owns 73.5 million shares (9.2% of the company's value), just one week after Musk attacked the platform and hinted that he would establish an alternative to it.
After the announcement of Musk's stake in Twitter, the share price rose by 27%, from $39 in early April to $50 a share on the fourth of the same month.
This rise made a number of Twitter investors file a lawsuit against Musk, accusing him of deliberately delaying the announcement of his ownership of the company’s shares - in violation of the law that dictates the necessity of announcing the ownership of any person or entity’s shares in a company on the stock exchange when his stake is more than 5 % of its shares - in order to continue buying shares at a low price, and to avoid a rise in the share price, which caused harm to investors who sold their shares in recent weeks at a low price.
However, Musk didn't seem interested in this lawsuit, because even if the judiciary decided that there had been a violation and manipulation on his part, all he would get from this lawsuit was a small ear pinch and a fine of no more than a million dollars, which is much less than what he earned by buying Twitter shares. At a low price, then rose dramatically after announcing his ownership in it, which made him reap - nominally on paper - about $ 156 million in profits in just 10 days.
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waving change
After Musk announced his large stake in Twitter, he began aggressively posting controversial tweets with a range of changes he envisioned making to the platform.
His visions included drastic changes to subscription and advertising models, and even technical features to improve the user experience.
Musk hinted at the possibility of activating the “modify” feature of tweets after they were published, which met with great interaction among the platform’s pioneers who have long demanded the presence of this feature.
Do you want an edit button?
— Elon Musk (@elonmusk) April 5, 2022
Musk also suggested decreasing the monthly subscription price for Twitter Blue, a paid service launched by Twitter in the summer of 2021 that includes a number of exclusive features for users for $3 a month (Musk suggested reducing the price to $2 in exchange for a 12-month payment in advance).
Meanwhile, the controversial businessman made a proposal that surprised many users to reduce the circulation of ads on the platform.
Musk also posed a controversial poll, in which he asked his followers whether Twitter's headquarters in San Francisco should be converted into a shelter for the homeless and refugees, given that there are only a small number of employees, to get the approval of 90% of the participants.
As for the real surprise, it was when the current CEO of the Twitter platform, Paraj Agrawal, published a tweet on April 11, in which he said that according to the platform’s regulations, Elon Musk’s acquisition of this huge share of the company’s shares allows him to join its board of directors, but Elon Musk apologized. For accepting the position without giving reasons.
This move has most observers speculating that Musk will not be satisfied with merely owning a "stake" in Twitter, and that his true intentions go far beyond that.
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Trojans
Elon Musk's refusal to join Twitter's board was not arbitrary. Regulations say that someone joining the company's board will automatically prevent them from owning more than 14.9% of its value, including securities, swaps and other transactions.
In a more clear sense, Musk's accession to the company's board of directors automatically meant that he was deprived of owning larger stakes in it.
The businessman did not delay long before revealing his intentions, announcing in a brief tweet published on the fourteenth of April that he had made an offer to buy the entire Twitter platform for an amount of 43.5 billion dollars, i.e. at a value of 54.2 dollars per share, and an increase of about 15 dollars per share compared to the closing price beginning of the month.
Presenting the bid, Musk said the platform had "extraordinary potential" that he would be able to best manage.
This offer in itself is not binding in principle, but Musk put at the end of it a direct warning, saying that if his offer is not accepted, he will reconsider the share he bought from the company and treat it as a bad investment, which means that he will sell his entire stake. , causing a significant drop in the share value that could cause the company's market value to collapse dramatically.
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Only then did everyone realize that for the past months, Elon Musk had been playing the role of a Trojan horse, seeking to own a controlling stake in Twitter, enabling him to exercise a "hostile takeover", which is considered one of the most dangerous practices in the world of corporate investment.
Aggressive possession
Musk's "hostile takeover" is not new in the business world. It simply means taking a company unfriendly, that is, without the consent of its board of directors, after owning a controlling stake in it, and trying to entice or force shareholders to accept the acquisition and change management, or the threat to withdraw completely from the company, which leads to the collapse of its market value.
As soon as he announced his threatening takeover offer, Twitter issued a quiet official statement in which it said that it was studying Musk's non-binding offer in line with the interests of its board of directors and its shareholders, at a time when the protests of some large shareholders, most notably Saudi Prince Al-Waleed bin Talal, who announced his refusal Musk, as one of the oldest and largest investors in the platform, offered a 5.2% stake, saying that he did not think that Musk's offer came close to the real value of the platform in light of the massive growth it has achieved.
I don't believe that the proposed offer by @elonmusk ($54.20) comes close to the intrinsic value of @Twitter given its growth prospects.
Being one of the largest & long-term shareholders of Twitter, @Kingdom_KHC & I reject this offer.https://t.co/Jty05oJUTk pic.twitter.com/XpNHUAL6UX
— Alwaleed bin Talal (@Alwaleed_Talal) April 14, 2022
This protest angered Musk, and entered him into an argument with the Saudi prince, hinting that the percentage owned by Kingdom Holding in Twitter does not allow him to lead the conversation or decide on his own whether to accept or reject, then he asked him with a sarcastic glimpse about his opinion and the opinion of his company on freedom of expression and the press, A principle that Musk defends all the time and pledges to implement in the event of a Twitter acquisition.
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The poison pill tactic
A day after this sparring, Twitter announced that it would implement a "Poison Pill Tactic" to counter Elon Musk's plan to take over the company completely, which meant that its board of directors rejected the takeover offer.
The platform said that it would implement this plan if Elon Musk's ownership of Twitter exceeded the 15% barrier without obtaining the approval of the board of directors.
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The term “toxic pill” first appeared in the business world in the early eighties, and it means a defensive tactic used by corporate boards to counter hostile takeover attempts by other parties. It was named after the spies who carry with them a deadly poisonous pill that they use to end their lives. before they are captured.
The "poison pill" plan simply means, making the acquisition of the company more difficult and less attractive for the party seeking to acquire it, in several ways, including a significant increase in the value of the stock, or - and this months - the company's issuance and offering of a very large number of additional new shares To buy at low prices.
In this way, it becomes difficult for the acquiring entity to buy all the new shares to reach the full acquisition, because it will have to pay more money to acquire constantly larger shares.
This tactic either increases the total value of the acquisition deal, or forces the company that wants the acquisition to sit at the negotiating table and avoid the total acquisition.
This method was used by many companies to protect themselves from manipulation and complete acquisition, most notably Netflix, which resorted to a "poison pill" in 2012 to confront the plans of businessman Carl Icahn, owner of a 10% stake in its shares, and who was trying to increase his share through Buying more of the company's shares, as Netflix announced that any attempt to buy more shares above a certain share would make it flood the market with new shares, making the attempt to acquire them expensive.
The same thing happened to Papa John's, which specializes in managing pizza restaurants, when it used the poison pill tactic to counter the efforts of its founder and former president John Schnatter to acquire a larger share of his 31% stake, and announced that if an owner's ownership increased without the consent of Board of Directors, they will double the share price.
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Plan B
In a lengthy interview conducted by Elon Musk with the global platform "Ted" published on April 15, the prominent businessman discussed a number of his tech projects.
When the interviewer asked him about his position if the Twitter board of directors did not approve his offer to take over the company, and whether he had an alternative plan or would he stop completing the deal, he answered after a period of silence, stressing that he already had an alternative plan, but he refused to disclose it amid the laughter of the public.
As of the moment of this writing, no one can predict what the coming days will hold in the crisis between Elon Musk and Twitter, and what exactly Musk means about “Plan B.” However, Musk continues to press the public through his active Twitter account, where he conducted a poll For an opinion on whether the decision on his acquisition offer should be a concern of the shareholders and not the board of directors, to obtain the approval of 83%.
He also shared an opinion poll on whether users support his purchase of Twitter, and the majority were in favor of it.
But it is certain that one of the alternative plan scenarios that Musk talked about is to return again to his first threats of the possibility of establishing a new social media platform that competes with the existing platforms, or supporting new platforms that compete with Twitter such as the “Truth Social” platform founded by Donald Trump And taking advantage of its huge audience in attracting millions of users to it quickly.
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The question remains until this moment: Will the Twitter platform join Elon Musk's empire voluntarily or not?
Or will the blue bird not allow itself to be up for grabs for the ambitious billionaire?
This is what developments in the coming weeks will reveal.
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Sources
1 - He threatened to create a private platform.. Mask angry at Twitter
2 - Musk buys 9% of Twitter shares a week after criticizing it
3 - Several birds in one fell swoop .. Why did Elon Musk buy 9% of Twitter shares and give up the membership of its board of directors?
4 - Elon Musk sued for misleading Twitter contributors
5 - Elon Musk proposes to reduce the price of subscription to Twitter Blue and ban ads
6 - Elon Musk offers to buy Twitter entirely for $43 billion
7 - A verbal debate between Alwaleed bin Talal and Elon Musk because of Twitter. The latter responds with two questions to the Saudi prince
8 - Twitter adopts 'poison pill' measure that could thwart Elon Musk's takeover bid
9- After Twitter adopts the poison pill plan, what is that strategy and when do companies resort to using it?
10. Elon Musk's 'Plan B': 6 Possible Scenarios Of What Happens Next