To escape Elon Musk, Twitter may have to sell itself to… Microsoft?

Every few years in the past two decades or so, a similar situation has unfolded on Twitter. The company finds itself in an impasse and must consider selling itself. In the mid-2000s, Twitter welcomed approaches from Yahoo and Facebook. Then, a few years later, awareness from Google, and, in 2016, a Disney offer. Facebook’s $500 million proposal Most likely stands out the most, as it was the most highly regarded of the lot, coming at a time when CEO Jack Dorsey had just left (sound familiar?) and questions swirled around whether the company would ever measure up of its economic potential.

“All acquisition events for Twitter have always been tied to other board dramas or CEO leadership changes, like, you know, the one that’s happening right now,” Jason Goldman recalls, a founding executive of Twitter. He spent nearly a decade on Twitter’s board and was there for Yahoo, Facebook and Google deals. “Twitter has the kind of cultural resonance that much larger companies would like to have, a larger cultural footprint than the size of the company suggests,” Goldman says.

Today, Twitter is in trouble again, and it might be time to add another potential contender to the list, such as Microsoft or SalesForce, for example. Let me explain: Twitter currently has a new, untested CEO, Parag Agrawal, who is trying to grow the company — to close that gap between commercial potential and cultural significance. He faces the advances of the richest person in the world, Elon Musk. Musk wants to buy Twitter for $54.20 per share, a modest premium to where the stock has traded recently, valuing the company at $43 billion. (It’s delivered in classic Musk fashion: “420” at the end of its stock price number is a deliberate reference to April 20, a day that marijuana enthusiasts consider a holiday.) his opening, Musk expressed his skepticism about the company. current management. He said he wanted Twitter to be “the platform for free speech in the world” and added: “I realize now that the business will not thrive or serve this societal imperative in its current form. Twitter needs to be turned into a private company.

Twitter may not want to sell it to Musk, but it could soon run out of options to push it away. And if Musk doesn’t close the deal, he may have unwittingly opened the door for other acquiring parties to come in and launch their own offers.

Twitter lacks the protection afforded by the dual-share classes that Meta, Snap, and Alphabet have, which prevent raiders from showing up at the company’s doorstep. Twitter could adopt a poison pill strategy, selling shares at a discount to dilute Musk’s stake. By doing so, Agrawal could walk away with control of Twitter, but it’s unclear how much of Twitter might remain after such a stock sale reduced the company’s market value.

To escape Musk, Twitter may need something called a white knight in the redemption game, a well-capitalized suitor it can live with more easily than the mercurial electric car mogul. The most famous example of such a strategy was Warren Buffett’s 1989 bailout of Gillette, when he bought $600 million worth of preferred stock to end a hostile takeover attempt by Coniston Partners.

Buffett does not come into play with Twitter. In fact, when you consider who might be able to come to the rescue on the social media platform, the list is pretty short. Consider past suitors. Facebook/Meta is likely out because it is the subject of an ongoing antitrust investigation by the Federal Trade Commission. So does Google, which is facing scrutiny from the Department of Justice. yahoo? Not likely. Disney certainly has the money and probably wouldn’t face much criticism from regulators. But Bob Iger, the Disney CEO who thought he was buying Twitter, is gone, and he had nothing good to say about almost buying Twitter in his 2019 memoir.

“Twitter was a potentially powerful platform for us, but I couldn’t overcome the challenges that came with it,” Iger writes. “They understood how to deal with hate speech and make tough decisions about free speech…and the general rage and lack of civility.” (Many of these issues still plague Twitter today.)

OK, so who could bail out Twitter? Here’s the thinking from Wall Street: Salesforce could afford it, and co-CEO Marc Benioff once seriously considered buying Twitter before changing his mind. Salesforce’s other co-CEO, Bret Taylor, certainly knows Twitter. He is actually the chairman of the board of directors of Twitter. But it’s unclear whether that would make Salesforce more or less likely to sue Twitter.

PayPal is a dark horse competitor after pursuing, then dropping, a $45 billion deal for Pinterest last year. Although the PayPal-Pinterest link makes more sense when you think of Pinterest less as a social network than a social shopping site, as PayPal has a lot of payment transaction information.

Another likely competitor appears to be Microsoft, according to Wall Street sources. The company declined to say whether it was actively considering getting into the Musk-Twitter fray. Of course, this recently signaled a desire to buy a social media company. In 2020, he enthusiastically pursued a roughly $50 billion acquisition of TikTok, losing only because of interference from the Trump administration. Moreover, Microsoft’s purchase of LinkedIn for $26.2 billion has already proven that it can turn a quixotic social network into a slot machine. LinkedIn’s revenue has grown from around $2 billion in 2016 when Microsoft bought it to more than $8 billion, according to Statista, a data analytics firm.

“Microsoft has added tremendous value to Linkedin,” said Jefferies analyst Brent Thill. “And if you think about it, Microsoft would add professionalism. trust and respect. That’s right: an offer from Microsoft probably wouldn’t be partly framed as a reference to growing weed, which, oddly enough, only counts as the latest weird development in Twitter’s tortured history of trying to to sell.

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