What is Musk really doing with his $43 billion bid to buy Twitter?

Mercurial billionaire Elon Musk now says he wants to buy Twitter, taking it private to reinstate his commitment to what he calls “free speech.” But his $43 billion bid, which failed investors and bristled the boardask as many questions as there are answers.

Among them: Is he serious? Can he collect the money? Would a sale please shareholders? And what would the social platform look like if he was successful?

Twitter said its board “will carefully consider the proposal.” But a major investor has already spoken out against the offer. Saudi Prince Alwaleed bin Talal, who Bloomberg News says controls more than 4% of Twitter, said on Thursday that “I was rejecting” the offer.

“I do not believe that the offer proposed by @Elon Musk ($54.20) approximates the intrinsic value of @Twitter given its growth prospects,” Alwaleed wrote on Twitter.

Why is Musk interested in Twitter?

Apparently because the service, he says, doesn’t live up to its potential as a “free speech platform.” Musk insists he’s not interested in making money on Twitter and said Thursday that his motivation stems from the realization that “having a broadly inclusive, maximum-trust public platform is extremely important for the future of civilization”.

Twitter, like other social media platforms, suspends accounts for violating content standards, including violence, hate speech or harmful misinformation. His suspension of former President Donald Trump has angered his supporters.

Musk has described himself as a “free speech absolutist” – but he has blocked Twitter users who question or disagree with him. Regulators have also accused its automaker, Tesla, of retaliating against black workers who spoke out against discrimination.

Did Musk say where he would get the funds to buy Twitter?

No. And its regulatory filing says the offer is subject to “completion of anticipated financing.”

During a Thursday onstage interview at the 2022 TED Talk, Musk vaguely noted that he had “enough assets” to close the deal, adding, “I can do it if possible.”

Typically, people or companies offering to buy other businesses offer financing, in the form of cash, stock, or debt. But his offer letter did not include details on how he would arrange the funding.

Can he use his personal fortune to buy it outright?

Musk is the richest man in the world, according to Forbes, with a fortune of nearly $265 billion. But much of his money is tied up in shares of Tesla — he owns about 17% of the company, according to FactSet, which is valued at more than $1 trillion — and SpaceX, his private space company. It’s unclear how much money Musk has.

“I think it will be somewhat painful and I’m not sure I can get it,” Musk said in his Thursday interview.

Musk could sell Tesla shares to raise cash — which could hurt Tesla’s share price — or borrow against his stock holdings. But Forbes notes that he has already used more than half of his Tesla stake as loan collateral.

What does Twitter think of its offer?

On Friday, Twitter’s board adopted a so-called poison pill to block Musk’s takeover of the company. The plan prohibits any shareholder from buying more than 15% of the company “without giving the board sufficient time to make informed judgments and take actions that are in the best interest of shareholders,” according to a statement.

Twitter’s stock traded below the offer price of $54.20 per share on Thursday, closing at $45.08, suggesting investors have doubts about the deal. The shares have traded above $70 for the past 12 months and peaked at $80.75 in February 2021.

Markets are closed on Fridays for Good Friday.

There has been a management turnover since co-founder Jack Dorsey left Twitter in November with a new CEOParag Agrawal, whose first actions involved internal reorganizations.

There were no major changes in Twitter’s products. Despite its outsized influence due to posters of high-profile celebrities and politicians, as well as a dedicated journalist base, Twitter has fewer users than social media rivals like Facebook and TikTok. Musk himself is a huge user, with over 81 million followers.

Dorsey, still a major shareholder, hasn’t said publicly what he thinks of Musk’s offer.

How could Musk change Twitter?

It’s hard to know with Musk, and even trying to solve that hypothesis might take the man too seriously. By saying that Twitter is not living up to its potential to be a “platform for free speech”, it seems to be saying that it would reduce content moderation.

But he also called on the company to crack down on spam accounts, which means more moderation.

He proposed removing ads from the service — ads are how Twitter makes money — and turning its San Francisco headquarters into a homeless shelter. He also seems to endorse a button to edit tweets.

What could be Musk’s downside as the owner of Twitter?

Social media companies struggle to contain misinformation and hate speech. Musk, whose tweets can cause online bullies to swarm his online critics, doesn’t seem keen on content moderation.

“Regulators around the world will be flinching at the potential free speech implications if Musk’s takeover bid succeeds,” said GlobalData analyst Rachel Foster-Jones. “Musk is clearly serious about promoting free speech for the benefit of democracy, but the line between free speech and hate speech or disinformation is becoming increasingly blurred, and attempts to change of Twitter could easily spiral these problems out of control.”

In his interview with Anderson, Musk said that Twitter is “bound by the laws of the country in which it operates, so obviously there are limits to free speech in the United States and of course Twitter should abide by those rules.” . But he said it was “pretty dangerous” to have “mysteriously promoted and demoted tweets” and to have a “black box algorithm”.

And after?

Twitter could hire bankers and advisers to help it review the deal, said Scott Kessler, technology, media and telecommunications analyst at Third Bridge. And other buyers could emerge: “It seems that if potential strategic and/or financial buyers are interested in Twitter, they should probably commit now.”

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