On April 4th, Elon Musk made an SEC filing announcing that he had purchased 9.1% of Twitter, becoming the social media company’s largest shareholder at the time.
This purchase seems to be connected to a March 25th Twitter poll posted by Musk, asking “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?”
“No” won the poll by over 40%.
When Musk later decided not to join Twitter’s board, many pointed out that he may not have wanted to submit to an invasive background check. However, what may have been more of a deterrent was the requirement that he not increase his stake to more than 14.9%.
In an April 13th statement, Musk mirrored this sentiment, saying, “I believe that the company should be private to go through the changes that need to be made. After the past several days of thinking this over, I have decided I want to acquire the company and take it private.”
This filing also included a $43 billion buyout offer to Twitter, offering $54.20 in cash per share. This was a large offer compared to standard buyouts, with a high premium over Twitter’s current market cap. However, Twitter rejected his offer.
Musk’s purchase and offer have caused some pushback. Vanguard Investments has since raised their share in the company to just over 10%, overtaking Musk as the largest shareholder. Additionally, Twitter adopted a Limited Duration Shareholder Rights Plan. In a move commonly used to avoid hostile takeover of companies, the plan allows shareholders to buy additional shares at a discounted price if any shareholder acquires an ownership stake of more than 15% without approval from Twitter’s board.
While these measures make it more difficult to acquire Twitter, Musk has hinted at a future tender offer, which bypasses the board and offers cash directly to shareholders.
