Entrepreneur Elon Musk, after buying more than 9% of Twitter shares and understanding that a seat on the company’s board would not be enough to change its course as he intends, remains determined to buy the company in its entirety despite the resistance presented by the directive.
Twitter rejected the offer of more than $43 billion, resorting to the poison pill, a strategy used by companies to discourage hostile takeovers. This move has served the company several things: making sure Musk has enough money to make the acquisition, trying to retain control of the company because they honestly believe it’s worth more, and giving other potential buyers time to make a counteroffer.
The popular and controversial billionaire has submitted this Thursday to the US Securities and Exchange Commission (SEC) that has secured financing of 46,000 million dollars to help close the deal by agreement, which Twitter has so far rejected, or through a public offer to shareholders, which could sell you the shares directly, even though acquiring more than 15% of the shares is financially counterproductive due to the poison pill.
The operation will be financed by Morgan Stanley
The presentation details the different commitments that the businessman has achieved to secure an aid of up to 46.5 billion dollars to help finance the possible acquisition.
Musk has raised $25.5 billion in debt through the Morgan Stanley fund and other firms in addition to $21 billion in equity financing. Among the other firms that would help close the agreement we can find the Bank of America or the British financial services company Barclays.
In turn, it is indicated that Musk “has not initiated, nor has he decided yet to initiate, any acquisition offer for all of Twitter’s shares”, but that he may directly or indirectly take additional measures to promote the proposal directly. or the possible offer.
In other words, the businessman has not yet informed the SEC that he is going to carry out the public offer, but he reports that he already has the financing secured for this to happen. This comes under direct pressure for Twitter once the question of whether or not Musk would have the money was cleared up. Numerous analysts have deduced that it would be very difficult to obtain the financing, since all of Musk’s fortune is in Tesla shares. Once this doubt is cleared up, a range of different possibilities opens up.
What options are there now for Musk?
If Twitter hadn’t resorted to the poison pill, Elon Musk could buy the company right now through a management deal or by going public. He could even buy shares until he has 51% of the company and gain control on the board. But this cannot happen because, basically and for all practical purposes, the pill does not allow anyone to get more than 15% of the shares. Why not? Because if someone buys more than 15% of the shares, the rest of the shareholders have the right to obtain $420 in shares by paying $210. The figure is not relevant, it is a simple joke response to Musk’s little boy jokes with the numbers 69 (sexual posture) and 420 (allusion to marijuana).
What is relevant is that the board would allow each shareholder to double their number of shares in Twitter for free except for Musk. So it’s the never-ending story, and after buying 16% of the company you keep only 8% because now there are twice as many shares.
This article is still in development…