Elon Musk's hostile offer may not be viable, but it opens Twitter to an acquisition; should Twitter fend off Musk, the company will watch its stock drop

Bloomberg 2022-04-16 Matt Levine

Context & Ripple Effects

Musk's bid changed Twitter's posture from resisting an unwanted approach to being a company openly in play. Subsequent coverage says the board accepted the bid, framing that choice as a preference for shareholder value over the company or product.

First-order effects

Twitter's board must weigh Musk's hostile offer against the market penalty implied by rejecting it, putting shareholders and the company’s standalone valuation at the center of the decision.
The bid immediately makes Twitter an acquisition target rather than a company able to treat Musk’s approach as a contained dispute.

Second-order effects

A sale process raises pressure on Twitter to preserve its operating stability: the company later warned that the bid could impair hiring, retention, productivity, and business changes.
Musk gains leverage to revisit price as the transaction develops; later coverage records that he said a lower-priced deal was possible.

Third-order effects

The episode points to governance in which a public platform’s strategic direction can be subordinated to the premium available in a takeover, particularly once a bidder exposes the downside of remaining independent.
If a bidder can use deal uncertainty to weaken a target’s operating position, takeover negotiations become consequential for employees and product execution as well as shareholders.

The trend: High-profile platform takeovers are making public-company governance a contest between shareholder returns, operational continuity, and control of the product’s direction.

Discussion

@jack @jack on x
@SGBarbour as a public company, twitter has always been “for sale.” that's the real issue.
@elonmusk Elon Musk on x
Taking Twitter private at $54.20 should be up to shareholders, not the board
@haroldpollack Harold Pollack on x
Imagine a world in which people of stratospheric wealth were as obsessed w/protecting global health as they are w/cryptocurrency+culture-war fights on social media. Elon Musk could provide covid vaccines to every remaining unvaccinated human at lower cost than this Twitter bid. h…
@chriscillizza Chris Cillizza on x
My favorite newsletter these days is by @matt_levine. His take on Elon and Twitter is characteristically smart and funny as hell. https://www.bloomberg.com/...
@susannalharris Susanna Harris, PhD on x
This whole thing is kicking up some useful conversations (and maybe a bidding war for Twitter) but I don't think we need to worry about him taking the helm. I particularly like this @matt_levine article to explain why: https://www.bloomberg.com/...
@profgalloway Scott Galloway on x
“One of the questions was of course ‘do you have funding secured,’ and his answer was ‘I have sufficient assets.’ Which means no! ‘Yes’ means yes. 'I'm really rich, surely someone will give me the money' means no one has yet.” @matt_levine https://t.co/3INDCEOKDU
@mikeisaac @mikeisaac on x
matt has a predictably good newsletter on it today (the snakes in a can part got me) Sure Elon Musk Might Buy Twitter https://www.bloomberg.com/...
@reckless Nilay Patel on x
You know, you could fairly describe a publicly-traded company with a single class of shares as a decentralized ownership structure with community governance based on token holding https://twitter.com/...
@lizsimmie Liz Simmie on x
There are a lot of good lines in this but this is my favourite ‘Musk is not even gesturing in the direction of minimal compliance with securities laws at this point’ https://twitter.com/...
@burnettgracem Grace Maral Burnett on x
“Ordinarily if a billionaire chief executive officer of a public company offers to buy a company, the odds that he is kidding are quite low. When it's Elon Musk, the historical odds are, like, 50/50.” @matt_levine https://www.bloomberg.com/...
@karenkho Karen K. Ho on x
This has the greatest paragraph about a can of snakes and investment bankers I have ever read. https://twitter.com/...
@stevenbjohnson Steven Johnson on x
Bonus points for the phlogiston reference. https://twitter.com/...
@maxkennerly Max Kennerly on x
FYI if you want to see spelled out why Elon Musk's offer to buy Twitter isn't going anywhere. It's kind of like if Pete Davidson said he's going to play in the NBA. Theoretically possible? Sure, maybe he has a secret talent for 3-pointers. Actually going to happen? No. https://tw…
@ampressman Aaron Pressman on x
Goldman will say “so uh where's the financing coming from” and Morgan Stanley will say “oh the financing is in this can” and hand Goldman a can and Goldman will open the can and a bunch of fake snakes will pop out. “AAAHHH,” Goldman will scream, and then they will chuckle https:/…
@kbandersen Kurt Andersen on x
If you want to read just one article explaining and analyzing the Musk-Twitter business, this very smart and good-natured piece is probably it. https://twitter.com/...
@edmundlee Edmund Lee on x
.@matt_levine continues to perform the best exegesis on @elonmusk + @twitter (and all while on vacation!) https://www.bloomberg.com/... https://twitter.com/...
@ryanlawler Ryan Lawler on x
It was worth it for this alone https://twitter.com/...
@pkafka Peter Kafka on x
“Ordinarily if a billionaire chief executive officer of a public company offers to buy a company, the odds that he is kidding are quite low. When it's Elon Musk, the historical odds are, like, 50/50.” https://twitter.com/...
@carlquintanilla Carl Quintanilla on x
“When Musk was pretending to take $TSLA private, he pretended that he was going to let all of Tesla's existing shareholders remain shareholders of the new ‘private’ Tesla. This is not a thing.. And now he's doing it again.. Sure buddy!” @matt_levine $TWTR https://www.bloomberg.co…
@timodc Tim Miller on x
This is excellent. Tl;dr (but you should R): The musk twitter takeover is done unless he flakes, it's just a matter of time til the twitter folks realize it. https://twitter.com/...
@rubinreport Dave Rubin on x
Elon is literally trying to save the free world. He could buy and island or leave on a spaceship but he is choosing to fight. Notice who is with him and who is against him... https://twitter.com/...
@live_news_nick @live_news_nick on x
MORE: “One person close to the situation said that the board wanted to support CEO Parag Agrawal, who only assumed the role in November. Meanwhile, Musk hasn't provided details of his plans for Twitter or his financing for the deal.” $TWTR https://www.theinformation.com/ ...
@antoniogm @antoniogm on x
It's fascinating the outcry at the thought of Elon buying Twitter: We don't want this guy with the wrong values running the public square! Meanwhile one of the biggest Twitter shareholders is....Saudi Arabia. https://twitter.com/...
@keithboykin Keith Boykin on x
The Wall Street Journal reports that Twitter is considering a poison pill that would prevent Elon Musk from significantly increasing his stake in the company. https://www.wsj.com/...
@carnage4life @carnage4life on x
Elon already putting Twitter's board in a headlock if they don't put his offer to a shareholder vote versus rejecting it out of hand. There definitely will be some angry shareholders if there isn't a very very good reason for rejecting the takeover bid. https://twitter.com/...
@scottnover Scott Nover on x
Elon Musk's Twitter takeover has nothing to do with “free speech.” My latest essay in @qz: https://qz.com/...
@joshdcaplan Josh Caplan on x
Latest: Vanguard Group recently upped its stake in Twitter and is now the company's largest shareholder, bumping Elon Musk out of the top spot. https://www.wsj.com/...
@caroljsroth Carol Roth on x
“I'm going to leave Twitter if Elon Musk takes over” is the new “I'm going to move to Canada if Trump wins”.
@jeffnolan Jeff Nolan on x
gee ya think? https://twitter.com/... https://twitter.com/...
@nickbilton Nick Bilton on x
The Twitter board is currently watching season two of Succession to determine how to respond to Musk's takeover bid. “Pause it! Pause it! Logan just did a poison pill defense... Quick, that's it, we have to do a poison pill defense!”
@ashleyrcarman Ashley Carman on x
new (and not related to elon musk): i checked in on facebook's audio efforts and it's cooled down a lot. the company is focused on the metaverse and other priorities, like reels, and partners say its interest in podcasting is fading https://www.bloomberg.com/...
@amir Amir Efrati on x
new: Twitter's board views Musk's bid as unwelcome, we are told. That suggests a big fight is brewing. https://www.theinformation.com/ ...
@danprimack Dan Primack on x
Very notable that Twitter stock isn't rising close to Musk's bid. Traders either don't believe he's serious, that he can get the cash or that the board will accept.
@gaberivera Gabe Rivera on x
Would love if @TEDchris had asked Elon Musk to list, in his view, the most serious examples of free speech being limited on Twitter...
@armchairdude @armchairdude on x
Maybe this whole Elon Musk Twitter thing is the catalyst that gets someone to sit up and finally attempt to build a better Twitter. https://www.techmeme.com/...

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