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Twitter wants to use "poison pill" to defend itself against takeover by Elon Musk, Twitter share with price slide

2022-04-21T19:50:47.563Z


Elon Musk wants to buy Twitter for around 41 billion US dollars - but Twitter defends itself with a classic "poison pill" and an offer to other shareholders. The stock market does not currently believe in Musk's success: Twitter shares are falling significantly.


Enlarge image

I-Machine wants I-Machine:

Tesla boss

Elon Musk

wants to take over the short message service Twitter completely - but the company is fighting back

Photo: Hannibal Hanschke / AP

Elon Musk, the richest person in the world, wants to buy Twitter - but it is questionable whether his takeover attack will succeed.

The Tesla boss needs enough shareholders to sell him their shares at the $54.20 price Musk is offering.

Twitter fought back on Friday.

The countermeasure provides that other shareholders can buy additional shares cheaply if a buyer exceeds the 15 percent mark.

The move is a classic "poison pill" that companies threatened by takeovers resort to.

The plan should apply for one year, said the Twitter board of directors.

An exception would be if a deal is approved by the board of directors.

The stock exchange currently does not believe in Musk's success: the course usually rises in the direction of the bid for takeover plans - but on Friday the Twitter share fell to 45 dollars.

That's well below the $54.20 price offered by Musk.

Musk had also emphasized that he would not improve the offer any further.

Musk himself admitted doubts on Friday.

"I'm not sure I'll actually be able to buy it," he said Thursday.

However, the 50-year-old emphasized that he had “technically” the necessary funds to pull through the deal worth more than 40 billion dollars (37 billion euros).

Musk would have to sell shares or take out loans

Musk is by far the richest person in the world.

His wealth is estimated at $251 billion (€232 billion) by the Bloomberg financial service, based on the latest stock prices.

The wealth is mainly made up of holdings in the electric car manufacturer Tesla and the space company SpaceX.

To buy Twitter, he would either have to sell shares or take out loans with the holdings as collateral.

Several financial investors on board Twitter

But even if Musk can raise the necessary funds, shareholder approval is the big hurdle.

In addition to the free float, Twitter has several financial investors as major shareholders, each holding between two and eight percent of the shares.

So it would not be enough to convince only a few major shareholders to sell.

A key shareholder, Saudi Prince Alwaleed bin Talal, has already publicly rejected Musk.

The stock market expects other shareholders to follow bin Talal.

Musk railed against protection clauses from Facebook and Google

At the same time, Twitter is not as well protected against hostile takeovers as Facebook, Amazon or Google, for example, where founders were given shares with more voting rights.

This allows them to retain control of the company even if they no longer hold the majority of shares.

Musk has already railed against it: At the Meta group, for example, this ensures that "Mark Zuckerberg the 14th."

still in control of Facebook, WhatsApp and Instagram.

Musk wrote that the price was his final offer.

If the attempt fails, he will have to reconsider his commitment to Twitter.

"It's not a threat, it's just not a good investment without the changes that need to be made."

Threat or not - in any case, this can be seen as a rather transparent reminder to the shareholders that the price could fall again very quickly.

Criticism of Musk's free speech program

As a reason for his interest in Twitter, Musk states that he wants to strengthen freedom of speech on the platform.

That is only possible if the short message service leaves the stock market, he argues.

Musk described his idea of ​​freedom of speech as follows: "If someone you don't like can say something you don't like."

All opinions should be allowed within the law.

This attitude drew criticism from experts such as former Facebook security chief Alex Stamos.

You don't add value to a platform by making it 99.9 percent full of pornography and ads for fake branded sunglasses and ED drugs.

In recent years, it has been the conservatives in the United States, and above all the supporters of ex-President Donald Trump, who have accused Twitter and other online platforms such as Facebook of "censorship".

Most of these were about measures against the spread of false information about the corona virus and Trump's false claims that his victory in the 2020 presidential election was stolen.

Musk could change a lot

Twitter was recently worth a good 36 billion dollars on the stock exchange.

It was not until November that Twitter founder

Jack Dorsey

(45) withdrew from the top management and handed it over to

Parag Agrawal

(37).

Musk, with more than 80 million followers himself one of the most influential and widest-reaching users of the online service, has long been known as a critic of Twitter.

The multi-billionaire has repeatedly accused the company of restricting free speech.

Musk also wants to change many functions on Twitter.

He recently started a survey on his profile to ask whether Twitter users wanted an editing function to correct a tweet after it was published.

In less than three hours, more than 1.2 million users took part in the survey.

Around three quarters were in favor of Twitter allowing tweets to be corrected afterwards.

The company then stated that it was testing this function – but made it clear that it had been working on such a possibility for a long time and did not come up with this idea after Musk's suggestion.

Musk recently caused a stir when he asked his followers if Twitter was "dying".

He pointed out that many celebrities with millions of followers like Justin Bieber rarely speak on the platform.

Does Musk want to switch Twitter to a subscription model?

How exactly Musk wants to change Twitter remains largely open - for example, where he sees the deficits in free speech.

In the past few years, it was primarily the conservatives in the United States, and above all the supporters of ex-President Donald Trump (75), who accused Twitter of "censorship".

Most of these were about measures against the spread of false information about the corona virus and Trump's claims that his victory in the 2020 presidential election had been stolen from him.

Trump has since been banned from Twitter.

In the early days of the pandemic, Musk himself downplayed the dangers of the virus and criticized corona restrictions in California as "fascist".

Musk's takeover bid sparked speculation on Thursday that Trump's suspended account might then be unblocked again.

In this case, however, he would "probably" not return, Trump said on Thursday.

Twitter had become "very boring".

The platform has already lost most of the “most important votes”.

In a tweet over the weekend, Musk also hinted that he would like to replace Twitter's current advertising-centric business model with subscription revenue.

Relying on ad revenue gives big corporations too much power, he wrote.

Tesla does not have its own press department like in other companies.

But Musk is a master at using Twitter as a platform for self-promotion and Tesla marketing.

While there has been speculation in the past that almost half of his followers on Twitter could be fake accounts or bots, even after halving the current number of followers, around 40 million people still follow the Tesla boss the medium.

And they are receptive to opinions: Whether Musk commented on Twitter about Bitcoin, his own Bitcoin investment or Tesla, in most cases he moved the value of the cyber currency or the prices of Tesla shares - sometimes massively.

This brought Musk several times trouble with the US Securities and Exchange Commission SEC or with the US traffic regulator.

la/dpa

Source: spiegel

All news articles on 2022-04-21

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