On April 14, Twitter filed a filing with the U.S. Securities and Exchange Commission (SEC) that Musk submitted a non-binding privatization proposal to the company on April 13 to acquire all of its unopened ordinary shares of Twitter for $54.20 per share in cash, for a total consideration of $43 billion (about 274 billion yuan). Based on Twitter's closing price of $45.85 on U.S. stocks on Wednesday, the acquisition premium was 18%.
Image source: Visual China
After the news of the acquisition was made public, Twitter rose sharply before the session, rising 16.9% at one point, but then the gains fell back, closing down 1.68% at $45.08 on April 14. However, twitter shares began to rise again after hours. As of the close, Twitter's market capitalization was $36.093 billion.
Image source: Oriental Fortune
Musk's offer of $54.20 per share is a 54% premium to Twitter's closing price on January 28, 2022 (the trading day before Musk's recent massive buying of Twitter stocks) and a 38% premium to the closing price on April 1, 2022 (the trading day before Musk's recent public purchase of Twitter stocks).
Twitter: Musk's acquisition proposal will be reviewed
Musk: The potential is huge and it has to be privatized
According to Bloomberg, Musk has hired Morgan Stanley as an acquisition consultant. As the world's richest man, Musk's personal wealth is currently around $260 billion, the data shows.
The Daily Economic News reporter noted that Twitter's filing with the SEC said that Musk's proposal is not binding, and even if the two parties agree, the transaction will depend on many other factors, including: obtaining the required regulatory approvals; confirmatory legal, commercial, regulatory, accounting and tax due diligence; negotiating and enforcing the final agreement, and completing the expected financing.
Twitter said the company's board would review Musk's acquisition proposal and said any response would be in the best interests of "all Twitter (existing) shareholders." Twitter also stressed that the Company cannot guarantee that a final agreement on the proposal will be signed, executed or completed; it cannot determine whether or when Twitter will be able to respond to the proposal, nor can it determine the timeline for the implementation of any final agreement. At the same time, Musk has the right to withdraw the proposal or modify the terms at any time.
Twitter also added that if the transaction is finally completed, Twitter's common stock will terminate its registration under section 12(G)(4) of the securities exchange act of 1934, as amended, and will be delisted from the New York Stock Exchange.
As Tesla CEO and the world's richest man, Musk has always been a deep user of Twitter, and he has now posted more than 17,000 tweets on Twitter, with more than 80 million followers. Just last weekend, Tosker tweeted "Fury" Twitter head "Big V" with extremely low frequency, and "named" well-known singer Taylor Swift (90.3 million Twitter fans) and singer Justin Bieber (114.3 million Twitter fans).
According to CCTV Finance, Musk said that Twitter has great potential, but according to the current model, it cannot maintain the company's rapid development and assume its due social responsibility, and the company must be privatized. He also said it was his best and final offer and that if it wasn't accepted, he would need to reconsider his position as a shareholder.
With the layout in recent days, Musk has become Twitter's largest external shareholder. Documents from the U.S. Securities and Exchange Commission (SEC) show that Musk holds a 9.1 percent stake in Twitter (up from a previously disclosed 9.2 percent). But he refused to join the current board.
Musk launched another vote
The Saudi prince hinted: You have to add money
According to Bloomberg, anonymous sources revealed that Twitter's board is considering using a "poison pill defense" strategy to resist Musk's takeover offer, which will be announced as soon as April 15. The strategy, also known as "equity dilution anti-takeover measures," which allows existing shareholders of a company to purchase a large number of shares in the company at a discounted price, thereby diluting the acquirer's equity, is a common strategy used by U.S. companies to resist hostile takeovers.
Another option that Twitter is considering is declaring Musk's bid too low. As one of Twitter's major shareholders, Saudi Arabia's Alwaleed bin Talal Prince said on Twitter on April 14 that Musk's offer ($54.20 per share) was below Twitter's intrinsic value due to Twitter's good growth prospects.
Musk said at a TED event in Vancouver on the 14th that he was not sure if he would be able to successfully acquire it, and stressed that his intention was to retain "the largest number of shareholders within the scope permitted by law", rather than one person alone owning all of Twitter's equity. Musk also said that if the acquisition fails, he still has Plan B, but did not elaborate further on the details of the plan.
In addition, although Musk is the world's richest man, he has few liquid assets, and how to come up with tens of billions of dollars to complete the acquisition is a problem. Wells Fargo analysts pointed out that Musk may have to sell Tesla shares to raise cash for the acquisition. Speaking at the TED event, Musk said, "I have enough assets to be able to complete (the acquisition)." ”
On April 15, Musk launched a vote on Twitter titled "Going private at $54.20 a share should depend on shareholders, not the board." With more than 1.38 million people voting now 20 hours away, 84 percent in favor and 16 percent against.
In addition, Musk said that if the current Twitter board takes action against the interests of shareholders, they will violate their fiduciary duties. The responsibility they bear as a result will be enormous.
Earlier, Musk responded to the netizens' view that "if the Twitter board rejects the offer made by Musk, the act will directly violate the economic interests of shareholders" and said that if shareholders are not allowed to vote, it will be completely untenable, and it is the shareholders rather than the board that owns the company.
Musk was sued by other Twitter shareholders
Every reporter noted that due to the failure to disclose the shares held in a timely manner, Musk was recently sued by other shareholders of Twitter and accused of manipulating Twitter's stock price. In a class-action lawsuit filed in U.S. federal district court for the U.S. district of Manhattan, prosecutors said Musk failed to disclose his Twitter holdings in a timely manner and made "material false and misleading statements and omissions."
It is reported that according to the relevant securities laws of the United States, when an investor owns more than 5% of the shares of a company, it must be disclosed in a timely manner (within 10 days). According to SEC documents, Musk should have made the disclosure by March 24, but Musk did not disclose the news until April 4.
Former Twitter shareholders, led by Marc Rasella, believe that the delayed disclosure could allow Musk to buy more Twitter shares at a low price ahead of time and deceive them to sell shares at a lower price, missing out on a share price rise. Industry insiders said the SEC could investigate market manipulation regarding Twitter stock purchases.
Reporters | Cai Ding and Li Menglin
Edited | Lian Lan Suying Gao Han Du Hengfeng
Proofreading | Cheng Peng
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