1. So @elonmusk has sent an offer to acquire all of the remaining shares of @twitter (he already owns 9.1%). What does it mean for Twitter? IT'S A GOOD STORY. Thread (by an M&A lawyer) . . .
2. When @elonmusk acquired 9.1% of Twitter and subsequently rejected a seat on the Twitter board, every M&A lawyer in the world knew what was coming next. No one spends $$$ billions to be a passive and powerless investor in a company they like but think needs improvement . .
3. Yesterday, @elonmusk sent an offer to Twitter to acquire all of the Twitter shares he does not own at a price of $54.20 for each share. That’s a premium of 54% over the closing price of Twitter shares on the day before he began investing.
4. The offer is conditional upon his team completing legal, business, regulatory, accounting and tax due diligence; obtaining required approvals; and execution of satisfactory agreements; and anticipated financing. So more work to do . . .
5. In other words, they needs to look under the hood of the company. If his advisors confirm everything is as it should be & agreement can be reached on the sale, he intends to buy each share for the offer price of $54.20. What does an @elonmusk takeover mean for the company?
6. It means Twitter would no longer be a public company listed on the NYSE. It would become a private company 100% owned by @elonmusk. He would have complete control of how Twitter operates under his ownership. He's been thinking about it already . . .
7. Could Twitter resist @elonmusk's takeover attempt? Yes. It could recommend that its shareholders reject Elon Musk’s offer. But would that work? . . .
8. That depends on the reasons why Twitter would recommend shareholders should reject @elonmusk's offer. Those reasons could be purely ideological or purely financial. For example . . .
9. A purely ideological reason might be that as a ‘public square’ platform, it would be undesirable for Twitter to be in the hands of a single owner who could solely dictate how Twitter works in the future. Would that be persuasive? . . .
10. Maybe. But given the way in which Twitter has itself been accused (rightly or wrongly) of ideological and political bias in the implementation of its own policies as a public company, it's a difficult sell. In fact, @elonmusk has possibly thought of that . . .
11. Has he been laying the groundwork to address that issue on his own Twitter feed recently? 🤔
12. Also, has he been indirectly (and opaquely) foreshadowing his future actions to the public for a while? 🤔
13. The only purely financial reason to reject @elonmusk's offer is that the offer undervalues the company. Would that work? This is where it gets interesting . . .
14. Shareholders (especially institutional, who owe a fiduciary duty to their clients) are almost always driven more by financial than ideological arguments. Most takeovers come down to price. That’s why there’s a very important message in @elonmusk 's offer letter . . .
15. @elonmusk has stated that he is not going to bargain. He is “not playing the back-and-forth game”. If the offer is not accepted “I would need to reconsider my position as a shareholder.”!! 🤯 In other words . . .
16. @elonmusk is putting pressure on the Twitter board by saying: If you want the shareholders to reject the offer, you must convince them why a 54% premium is not an attractive one for them in circumstances . . .
17. . . . where if you advise them to reject my takeover offer for financial reasons, I could dump my shares and the value of their shares would go back to pre-@elonmusk levels 😛 Ballsy, but fair. But, there’s one more thing he hasn’t said (in the letter) . . .
18. Over the past few months @elonmusk has touted the possibility of setting up a rival platform to Twitter. That will be in the minds of current shareholders. Has he been playing the long game in public; right under everyone’s nose? 🤔
19. Could Twitter attempt other legally defensive moves to block the takeover? They could - but the Twitter board has an overriding duty to act in the interests of its shareholders & the voices/actions/views of shareholders are everything in these circumstances . . .
20. That’s why when @elonmusk tweets in public the narrative he creates is a lot more powerful than people realise. But what does an Elon Musk takeover mean for the current directors of Twitter? . . .
21. It doesn’t look good. In @elonmusk's letter to Twitter he states “I don’t have confidence in management”. If he succeeds in taking over Twitter, expect wholesale change at management level.
22. Here’s a link to @elonmusk's amended Schedule 13D filing, for your perusal:
sec.gov/Archives/edgar…
@elonmusk If you enjoyed this thread . . . 1. Follow me: @gavinjohnadams (for law and finance) 2. Please RT + like the first tweets of the thread to share the message:
