Will twitter become "Ma Jiajun"?
2022-04-15
Musk wants to buy all of twitter. Can he buy it? Musk's heart is well known. When he refused to join the board of twitter on Saturday, there was already speculation that he might buy the world's most influential social media company. Because the condition that Twitter had invited him to join the board of directors was that musk could not hold more than 15% and did not seek control. Sure enough, just a few days later, the world's richest man submitted a document to the securities and Exchange Commission (SEC) today, saying that he planned to buy twitter entirely at the price of $54.20 per share and turn twitter into an unlisted company. The overall valuation of Twitter is $43 billion. The richest man doesn't talk much Musk attached to the document an invitation letter he wrote to BRET Taylor, the independent chairman of Twitter and co CEO of salesforce. This open letter is very short, but extremely tough. He doesn't talk much, which is in line with his style. Musk's open letter to the chairman of Twitter "I invested in twitter because I believe in its potential as a global platform for freedom of speech. I believe that freedom of speech is the basis for the operation of democratic systems. However, after investing, I now realize that twitter can neither prosper nor fulfill this mission under the current mechanism. Twitter needs to be transformed into a private company. Therefore, I plan to buy all twitter shares in cash at the price of $54.2 per share, which is more expensive than I started The stock price premium before the investment is 54%, which is 38% higher than that before my public disclosure of the investment. This is my highest and final offer. If it is not accepted, I will reconsider my position as a shareholder. " The core sentence of Quanxin is the last sentence, "Twitter has great potential, and I will unlock it." This open letter has only 138 words in total, but there are 11 "I". This plain spoken language and self-centered narrative style have many similarities with former US President trump, who even wrote the official announcement as a tweet. He also attached a record of his correspondence with the twitter board, "As I said over the weekend, I believe twitter should go through the required change as a private company. After thinking about it over the past few days, I decided to buy twitter and privatize it. I won't negotiate back and forth. I intend to be straightforward. This is a high offer that your shareholders will like. If this offer doesn't work, given my lack of confidence in management, I don't believe I can promote the required change in the open market. I will reconsider being a shareholder. This is not a threat, but without the required changes, (taking a stake in twitter) is not a good investment. These changes cannot be accomplished without privatizing twitter. " Buy it if you don't like it As we all know, musk is a heavy user of twitter, with more than 81 million fans. As a global business leader with a very busy agenda, he tweets almost every day. And unlike other entrepreneurs' public relations tweets, Musk's tweets are full of strong personal color, laughing and scolding, and unscrupulous. After trump was banned by twitter for inciting congressional riots, musk was the most influential non entertainment online celebrity on twitter. As a heavy user, he has a lot of dissatisfaction with the twitter platform. Over the past few months, Mask has repeatedly publicly tweeted twitter platform, with specific functions, make complaints about management, and more for content audit standards. He publicly denounced Twitter's overly strict content censorship standards as undermining the cornerstone of freedom of speech, a democratic system. This conclusion coincides with American conservatives. They have always accused twitter of being biased and suppressing the voice of conservatives. As the world's richest man, musk decided to put his dissatisfaction into action. From the end of January, he quietly spent $2.6 billion on the open market to acquire 73.5 million ordinary shares of twitter, with a shareholding ratio of 9.1%, becoming the largest shareholder of twitter. After the disclosure, twitter had to invite him to join the 11 member board of directors in an attempt to "appease" the elusive world's richest man. Last Saturday was the day musk officially became a twitter director, but he unexpectedly rejected the invitation again. Obviously, at that time, musk had made up his mind to turn twitter into his own private enterprise and shuffle the management to achieve his goal of change. Do you really have cash to buy it? So can musk really buy twitter in its entirety? First, let's see if musk has the money to buy twitter. All cash acquisitions are not uncommon, but it is extremely rare for a super rich man to pay tens of billions of dollars for all cash acquisitions. Musk did not make it clear that he had obtained financing or held enough cash, but only that the transaction needed to complete the "expected financing". He has hired Morgan Stanley as the financial adviser for his acquisition. Musk's personal worth is currently more than $270 billion. At present, his Tesla shares are worth $176 billion, and a large number of options have not been exercised. In terms of total assets, it is sufficient. But importantly, musk does not have much cash assets on hand, which is the main reason for his massive sale of Tesla shares at the end of last year, because he must pay tax before exercising his options. Selling Tesla for cash is certainly the simplest means of financing. But musk doesn't need to sell cash directly when he needs money urgently. Because he can use Tesla shares to mortgage financing. Tesla allows management to pledge up to 25% of their shares. According to regulatory documents, musk held 172.6 million Tesla shares at the end of last year and had the right to buy 60 million shares. Regulatory documents also show that musk has mortgaged 88 million Tesla shares for personal loans. This means that his current line of credit for mortgaged shares is no longer enough to meet the capital demand for the $39 billion acquisition of twitter (he already owns 9.1% of twitter), and he must find new sources of financing. Musk also holds nearly half of space X, which is worth more than $35 billion. He previously admitted that he held cryptocurrencies with unknown amounts, including bitcoin, Ethereum and dog coin. So if the world's richest man really makes up his mind to buy twitter, his personal wealth is enough. At today's Ted 2022 event, musk was confident that he had enough assets to bear the transaction. The offer is not attractive Second, can he really buy twitter? Even if musk has money to buy it, twitter shareholders are willing to sell it. After musk announced its plan to buy twitter in full, the twitter board announced today that it would consider Musk's acquisition offer. However, this does not represent any official position, but the customary operation of the board of directors of listed companies to respect the value of shareholders. Although it is the most influential social media platform in the world, twitter does not show the corresponding performance, revenue and commercial value. At present, the market value is only $40 billion, or even two-thirds of the youth social platform snap, which is far from tiktok, LinkedIn, instagram and other social platforms. Unlike Internet companies such as Google and meta, Twitter's ownership structure is very fragmented. Musk won the largest shareholder status with only $2.6 billion, while co-founder Dorsey holds only 2.25% of the shares, which is already the sixth largest shareholder. Moreover, twitter does not set up a super voting structure, and musk can obtain enough voting rights by continuously increasing his stake. What are the major shareholders of twitter? According to the position data at the end of last year, vanguard, Morgan Stanley, Blackstone Group and statestreet, the top shareholders of twitter, are institutional investors, with shareholding ratios of 8.8%, 8.4%, 6.5% and 4.5% respectively. It is worth noting that Morgan Stanley is not only the third largest shareholder of twitter, but also the financial adviser of Musk's acquisition of twitter. But the low price may be one of the reasons why twitter shareholders hesitate. Although musk thinks his offer of $54.2 per share is 38% higher than the share price before he disclosed his shareholding information, his offer is obviously not very attractive because the current twitter share price is about $48. And Twitter's share price is currently at a low point, once as high as $77 at the beginning of last year. Investors may not think it is a good time to sell at $54.2. Saudi prince Alwaleed bin Talal, an important shareholder of twitter, has publicly said that he will reject Musk's offer on the grounds that the offer is too low. "Given the growth prospects of twitter, I don't think Musk's offer of $54.2 per share is close to the intrinsic value of the company." Jim Cramer, commentator of CNBC TV channel, also believes that the twitter board will not hesitate to reject the offer. Or collective resistance Again, is the twitter board willing to sell? It seems that the twitter board does not appreciate musk. According to US media reports, Twitter's board of directors is considering the poison pill plan to prevent Musk's malicious acquisition. Poison pill plan is a common means for the listed board of directors to resist malicious takeover. It sells a large number of shares to existing shareholders through equity dilution, so as to increase the price of malicious acquirers. If musk plans to make a hostile acquisition, the launch of poison pill by the twitter board of directors or the search for White Knight (introducing new strategic investors) will greatly increase his acquisition cost and force musk to voluntarily give up the acquisition. More importantly, Musk's reason for acquiring Twitter is to promote freedom of speech, which means that he plans to relax the current content control rules of twitter, relax the control on false information and incitement information, and even restore the account of former president trump. This will undoubtedly be strongly resisted by twitter management and employees. Twitter is headquartered in San Francisco, and its management and employees are dominated by liberals. Last week, twitter invited musk to the board of directors, which has aroused the concern of many employees. Ask the CEO to hold a weekly meeting and ask the employees to ask questions directly. Now musk plans to buy twitter entirely, which is more likely to trigger resistance from twitter employees. Twitter will hold a plenary meeting this afternoon to discuss Musk's acquisition offer. In the Silicon Valley Internet company culture that advocates equality, the collective boycott of employees means that the prospect of the enterprise is bleak. Musk clearly foresaw his unpopularity. He tweeted this afternoon to publicly pressure the twitter board. He said that if the board of directors directly rejected its offer and did not submit it for shareholder voting, it would be against the interests of shareholders. Twitter belongs to shareholders, not the board. In addition, musk also said that if rejected by the twitter board, he had plan B. Administrative veto is the deadliest Finally, there is another factor that cannot be ignored and is likely to be decisive. If musk really wants to buy twitter maliciously, the Biden administration is likely to veto the deal directly. In 2018, the trump administration rejected Broadcom's $120 billion hostile acquisition of Qualcomm on the grounds of national security, on the grounds that the acquisition may threaten Qualcomm and even the innovation ability of the United States in the field of mobile communications. Over the past few years, the Democratic Party has been emphasizing the social responsibility of social media, putting pressure on social platforms such as Facebook and Twitter to strengthen the content management of their own platforms, and combating false information and hate content. Musk's“
Edit：Li Ling Responsible editor：Chen Jie
Source：Sina
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