Elon Musk's Hostile Takeover: Here's How it Will Happen
In just one-week’s time, Elon Musk has positioned himself to potentially stage a hostile takeover of one of the world’s preeminent social media platforms, Twitter.
If the self-made billionaire and Telsa CEO is to make a move, that move will be made within days, Aron Solomon told The Western Journal.
Solomon, the chief legal analyst for Esquire Digital, walked The Western Journal through Musk’s Twitter “endgame,” which he believes is to acquire a controlling interest.
Speculation regarding Musk’s potential hostile takeover has run rampant thanks to the billionaire’s busy week of business moves.
On April 4, Musk was announced as Twitter’s largest shareholder after it became public knowledge that he had purchased 9.2 percent of the company for a reported $2.9 billion. The next day, it was announced that he would be joining the company’s board of directors.
Musk was then offered a position with the company’s board of directors on the condition that he not own more than 14.9 percent of the company’s outstanding stock.
After turning the offer down on Sunday, Musk issued an updated SEC filing on Monday, officially reserving his right to buy more shares of Twitter in the future should he so choose, The Verge reported.
Buying 51 Percent of Shares
“He’s doing one of two things,” Solomon told The Western Journal. “He’s either using the Twitter platform to get a lot of attention for himself … but more than likely, he sees this as a way to have control of a well-established social media brand.”
There are two ways Musk can go about a hostile takeover of the company — reaching out to individual shareholders and offering them a premium on their shares or issuing a tender offer. Either way, Musk needs to focus on finding a “win-win” with shareholders, Solomon said.
According to Investopedia, a “tender offer” invites “shareholders to sell their shares for a specified price and within a particular window of time. The price offered is usually at a premium to the market price and is often contingent upon a minimum or a maximum number of shares sold.”
If such a tender offer were to be made, Solomon said, shareholders would only receive the high premium if Musk were to receive a certain amount of shares, presumably over 50 percent.
Musk Needs to Move Fast
If Musk’s plan is indeed to take over, he needs to move quickly, according to Solomon.
As long as the news cycle remains focused on Musk and Twitter, Musk has the advantage.
“We’re going to forget about Elon Musk and Twitter three, four or five days from now if he allows it to go out of the news spotlight. So, I think that he’s got to make some really interesting, quick moves if he has an ultimate endgame here,” Solomon told The Western Journal.
“And if that endgame is to acquire more than 50 percent of Twitter, I think it makes more sense to get those things in motion now.”
This weekend’s move declining to join the board “may have been the first step towards that,” Solomon said.
“It made a lot of sense for him not to join the board because there was really no benefit to him,” Solomon said. “It wasn’t going to be a good cultural fit for the board or for him.”
Musk, a self-proclaimed “free-speech absolutist” has openly criticized the company’s approach to free speech issues and courting of “woke” culture.
Twitter is Dying, But Musk Can Save it
In Solomon’s view, the poor leadership of Jack Dorsey — Twitter’s co-founder and former CEO — was what led to the company’s current stagnation.
As CEO, Dorsey’s attention was split in multiple directions.
While running Twitter, Dorsey was simultaneously running digital payment platform Square, Inc. (now Block, Inc.) and, in Solomon’s view, seemed more interested in building his own “strange, weird” persona than in maintaining Twitter’s growth.
Should he take over, Musk is in a position to right the ship.
“Like Elon Musk or not, one thing that we know is that he’s able to take things from zero to 60 very quickly, whether it’s SpaceX or Tesla or anything that he wants to do,” Solomon told The Western Journal.
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