Elon Musk makes $43B unsolicited bid to take Twitter private

It could become any of the four options failed takeover, failed hostile takeover, takeover, or hostile takeover.

If the board says “good idea” and advises shareholders to accept the offer, it could or could not become a takeover, depending on whether enough shareholders (by share count) accept it (I don’t know how many is enough, but it’s almost certainly more than 50%, as an OK would force _all_ shareholders to sell. You can’t take a company private and keep shareholders around)

Technically, that wouldn’t be a hostile takeover, though, as it would be with agreement by the board.

If the board advises shareholders to reject the offer Musk could persevere. In the end, if enough shareholders sell their shares to him, the board’s opinion doesn’t matter. if enough shareholders do that, it would become a hostile takeover.

No, this is not a hostile takeover. A hostile takeover is if Elon bought up more than 50% of the shares. Which he can do much more cheaply than buying outright at a 38% premium.

If they decline his offer plan B may be to buy up the cheap shares until he has 51%.

Context for the unfamiliar:

https://en.m.wikipedia.org/wiki/420_(cannabis_culture)

Here is the yearly performance for every single fund that Ark is running. Keep in mind that some of them have existed for barely a year if that, but the point still stands.

ARKK (ARK Innovation ETF) - 54% down.

ARKW (ARK Next Generation Internet ETF) - 50% down.

ARKG (ARK Genomic Revolution ETF) - 53% down.

ARKQ (ARK Autonomous Tech. & Robotics ETF) - 25% down.

ARKF (ARK Fintech Innovation ETF) - 53% down.

ARKX (ARK Space Exploration & Innovation ETF) - 18% down.

I am not trying to attribute such performance exclusively to poor decisions, not at all. There is definitely a good amount of unforeseen circumstances that drove ARK ETFs down. But it is difficult to consider ARK's actions as a good source of predictions for tech companies they get involved with, given that 4 out of 6 of their funds are over 50% down in a year, and the rest are still down by a significant amount.

No idea about shorts. I would assume that the short seller would simply have to pay the original owner the end purchase price.

By default it would be something like - if the board approved it goes to a shareholder vote, and if 75% or 90% of the shareholders approve the rest are dragged.

I doubt the board can force all shareholders to sell, that would be an insane power position for shareholders

Note that this happens even if you're going to lose money on your investment.

Welcome to capitalism.

But also it's the job of the regulatory body to be the check for society

I know very little about public trading or the laws regarding it - especially compared to many other HN users - but here's my novice response:

Think about why that's a rule. The board doesn't own the company; the shareholders do. The board's role is to make decisions on behalf of the shareholders. The rule exists to ensure they do exactly that.

A board deciding to financially harm the investors they represent for the "good of humanity" goes against the very concept of investment. A public company intentionally acting against the financial interests of its owners would see its stock value immediately collapse, causing immense damage to its shareholders, employees, and customers.

If you want a company to act "for the good of humanity", it has to either be privately owned or align with the financial interests of its investors.

Legally, the Board can consider stakeholder goals and morality. I think if Musk announced a profitable-but-legal foray into genocide, you could urge shareholders to reject it, and no court will hold otherwise.

But at some point the shareholders can overrule you. And in those cases, we find management’s highest goal is usually preserving their own special salary, not the “interests of humanity.”

[1] https://en.wikipedia.org/wiki/B_Corporation_(certification)

This is not exactly true. Everyone holding Twitter believes that it will outperform the next best available asset. This can mean that it will decline less than cash (i.e. inflation) and decline less than other stocks. In our current market, this means people believe that Twitter has a good forward looking IRR, but it does not mean that all holders believe that the stock price should be $70.

>To make a successful hostile bid, you need to pay not just "more than the current price", but "more than the holders of 50% of current shares believe the company to be worth".

Again, this comes back to IRR terms. Sure Twitter may be worth $100/share ten years from now, but most people would take $50 today than $100 then.

>This is what makes it so difficult, and why this bid is very likely to be rejected.

The bid is likely to be rejected b/c it's likely made in bad faith. Read the SEC release and count how many times it says ' non-binding'

He sells and the price falls.

Then he announces a new platform and the price falls again.

If the shareholders are rational and believe the true value is greater than current price, why aren't people buying until it asymptotically approaches that price?

Optimism and hopes for future gains aren't priced in because they are fantasy and not yet material.

I don't see how this is relevant. All stockholders of any non-dividend paying company believe the price of the stock will go up. Takeovers with relatively low premiums happen all the time. That being said, Musk is definitely bargain hunting. I think the bid shows he isn't that serious and has no idea how to answer the fundamental monetization questions.

I can only add one minor point from a general and international perspective: 50% may not always be enough. At least in Sweden I think you need 90% to accept a bid before you can legally force the remaining 10% to sell their shares. Even if you accept that there will be minority shareholders you will need 67% before you can do some things, like e.g. issue new shares without giving minority owners right of first refusal.

I'm sure there's a lot of devils in the details all over the world, and I'd be surprised if there are none in the US.

It's hard to see how an owner of Twitter stock could rationally reject an offer with a guaranteed +38% return. For any serious investor, even if they believe Twitter is worth twice what it is now, they must have several other stocks they believe are also worth twice what they are now. And if Elon bought all of them out at +38% returns, that would be a tremendous year investing.

From the point of view of the investors, there is no risk. If offer is accepted, they get their bags of cash and walk away with hopefully more than what they paid for those share. Musk could shut down the business to the ground on day 1 and they still get to keep their cash (I wish he would).

Also the shareholders would get cash, they would no longer own the company at all and the future of the company would no longer be of their concern. Musk could shut it down and it wouldn't matter to investors, they'd already have their money.

But see, this point is irrelevant in this scenario. If they sell, every current shareholder gets bought out in full, they no longer have a stake in the company. He could shut it down the next day and it wouldn't affect the former shareholders, the company's future at that point is only Elon (and Twitter employees' and users') concern.

It's fiduciary duty to the shareholders, not the company itself, not the employees.

That's exactly what it is. Stocks trade on an open market. Twitter went public. They chose to become a commodity. That's how commodities work.

I think the people most offended by it tend to be the people who have lost that joie de vivre and miss out on the fact that we're all just existing here and now. Sure, do the very serious things that need to be done for a person with his resources, but in the end, we can't even prove it's not all just a damn simulation can we.

this was a trap - both barring his ability to gain more shares, as well as putting him in a place where he can't talk about twitter publicly to the same extent as a hostile takeover.

The price is only determined by who is buying and selling right now. Trading at $45 merely implies a nonzero number of shareholders value Twitter at $45.

Plenty of Americans spend 5 to 10% of their worth on stuff. Who cares what your neighbor paid for his boat....maybe dude just likes to drink Coors light on the lake.

If musk makes this purchase it won’t centralize power any more, but it will draw attention to how centralized that power is. Which is a good thing

How can it make things worse when it has literally always been the case as long as there has been “mass communication”?

Historically, taxation has been the most profitable form of revenue generation. But thats no longer the case. With globalism and multi-national product creation, a single person in a nation can be many times richer than any nationstate, with technology above and beyond any nationstate. What happens when musk has electric jets and fully-reusable ICBM's, has remade the world power grid in his image, is one of few entitys even able to get to mars let alone command and control the resources of the astroid belt.

This is just robber barons all over again and to believe otherwise one would have to be pretty ignorant of America's history. Chomsky's best insights are about how this kind of control actually works and it isn't really that journalists are censored by owners (though this does occasionally happen).

Twitter and WaPo's staff, sometimes, are nothing but liberal. A liberal wouldn't call anyone who questioned Fauci nazi or anti-science. A liberal wouldn't want to lock someone up or doxx someone just because they criticize Biden government. A liberal wouldn't celebrate the illness of Justice Thomas just because he is a conservative. A liberal wouldn't call someone who criticizes Sharia a xenophobic yet thinks it's totally okay for Khamenei to call for "eradicating" an entire nation and its people. A liberal wouldn't blatantly call Asian parents racists just because they support standard tests and entrance exams by popular schools. A liberal wouldn't call a government Nazi who didn't even try to consolidate power in the pandemic but celebrate another government for consolidating lots of power in the name of handling the pandemic.

Those people do not appear to be liberals. They are radicals.

https://fair.org/home/washington-post-ran-16-negative-storie...

Boycotting (the so called cancel culture by those it affects) is a fundamental and irreducible component of any “free” market.

You and I have very different definitions of the word "amazing"

For instance Twitter stock was $60 last october, if they didn't ask for at least that it would be shortchanging shareholders and also imply a declining company.

He is a sociopath. The fact that a sociopath wants to be a king of social media is disturbing.

I don't hate Twitter like I hate Facebook (mainly for ideological reasons and their propensity for exploitation) but god damn is their interface and entire product model annoying.

Maybe, but he's also being sued over a violation of market manipulation rules with regard to non-disclosure of his recent Twitter purchase, and that's not the first problem he’s had with those rules.

“Elon Musk” and “securities rules” don't really go together.

He may have just run out of good places to put it.

What are you talking about? He literally offered up the Tesla patents to anyone who wants to use them: https://www.tesla.com/en_GB/blog/all-our-patent-are-belong-y...

And:

>On June 12, 2014, Tesla announced that it will not initiate patent lawsuits against anyone who, in good faith, wants to use its technology. Tesla was created to accelerate the advent of sustainable transport, and this policy is intended to encourage the advancement of a common, rapidly-evolving platform for electric vehicles, thereby benefiting Tesla, other companies making electric vehicles, and the world. These guidelines provide further detail as to how we are implementing this policy.

https://www.tesla.com/legal/additional-resources#patent-pled...

Since there would no longer be any public investors in Twitter after this, that does not actually matter as far as the present investors are concerned.

The dude makes stocks move when he tweets memes. I think it's fair to say he's got some... extra pull.

So far, it is merely an offer for a takeover.

I see how this argument would be true. Thank you, that's actually quite insightful.

IDK, that sounds like more participation (in speaking and listening) than I'd expect out of a literal public square, although not by a whole lot.

I remember coming across street preachers on the Santa Monica promenade. I want to say 10-20 people would stop to listen, where 1-2 people would be speaking (preacher and a possible commenter). I don't even know how to estimate how many people simply walked by, but the audience being less than 20% of that sounds very likely.

TL;DR Anecdotal experience in one actual public square, estimates less than 20% of the physically present public participating, and less than 10% of that speaking.

Many of the largest platforms featured much less moderation in their past - even when they were much larger than Gab or Parlor - while also enjoying a smaller proportion of "less than desirable actors". Of course, whether that level was acceptable is debatable. Free speech is a double-edge sword and moderation is an astoundingly complex problem.

Whereas if you start with the popular platform and progressively remove moderation, you end up with different effects, because you still have the core, non-bad-actor population. That is, if your signal-to-noise ratio goes down, but the absolute amount of interaction with your platform increases, it may still be worth it.

so... Twitter

Furthermore, there's a difference between totally doing away with moderation and pruning some of the more ideologically slanted moderation policies at twitter.

Imagine: scam protection plugin. spam protection plugin. anti racism plugin.

Let users vote who gets ears. If users say they want to silence racists, by saying racists things a user ends up being blocked by all the people who want to silence all racists. Users then vote and racists know that algorithmically they cannot heard because they know the majority have silenced them. But they also aren't enraged that they are being silenced because they aren't. They're just blocked by the user base who doesn't think their words have value.

If twitter does not allow as much free speech as possible, that speech simply ends up moving to other platforms anyways. So much to all the pro censorship crowd's chagrin, their censorship isn't actually doing anything except protecting their ears from hearing what they don't want to hear, and in reality making the other side band together even more fiercely. Might as well keep all the speech and just allow people to choose their own protection.

You never have to listen to them if that's what you choose. Let people choose what gets silenced instead of letting some authority choose for you. Giving up that power has historically lead in only one direction, and I don't see why its any different in this case. Adults are not children. Let them discern what is right and what is wrong.

The only way forward is to keep free speech available, and we can keep it and have protections for those who want it, so why not?

Twitter has had spam and crypto scams in replies for years now. Every tweet by Elon Musk has had scammy fake giveaways that steal people's financial info, from accounts that copy his profile picture and name. Anyone would agree Twitter's response has not been adequately effective, and he has complained about this for a while, and even said during today's TED event that he wants to stop this sort of spam.

If anything, I think it's more likely we'll see hardcore engineering efforts - I'm not sure why Twitter hasn't looked into some sort of perceptual hashing database for profile pictures of popular accounts, and hide replies from anyone who uses a similar profile picture.

This is obviously different from the political censorship, such as Hunter Biden's laptop, where I think Musk strongly disagrees with current leadership.

Parler/Gab failed in having approximately zero engineering efforts to prevent spam.

that's just a loophole from people who have no argument so they go with the [legal in the US = Moral]. Just because the modern "public space" is now private, it doesn't make it any less bad when the group in charge arbitrairely ban groups of people based on politics, opinion, etc.

whether you like it or not (I hate it personally), the vast majority of the news and opinions that people consume today comes directly or indirectly (eg. linking an NYT article on facebook) from a handful of social media companies. It's getting even worse now that organisations and politicians are using social media platforms as their official channel of communications

I think we have a similar problem with email accounts. Getting your gmail account banned can really fuck your life and sooner or later something will have to be donne to protect people (eg. force them to a have a proper appel system or to hand over all your data +forward your emails for a while after they kick you out).

It really hinges on what you mean by the phrase "free speech" when there is no clear context.

It is true that in the context of US lawmaking, the free speech rights specified in the 1st Amendment are in play.

But there is the concept of free speech outside that context also. For example the editors of a newspaper being inclusive of viewpoints in the "Letters to the Editor" section or a radio show being inclusive of viewpoints from callers or a website operator being inclusive of viewpoints in public comment sections.

I think there is value in advocating for inclusiveness in those (and other) contexts and labeling that idea "free speech" but I don't think it has to be "absolutely no moderation or restrictions". There is room for an editorial policy in those places and there is room to criticize any particular policy that some entity might put in place as not being supportive of "free speech" even when there is no 1st Amendment context in play.

American Social Media corps are pretty heavily progressive-dominated, which is typically called "The Left-Leaning Bias", but that's a shame, because American "Leftism" is really a laughable low-dimensional projection of what actual leftism looks like. So anyways, because of this, progressive social media denizens reciprocate this preferential treatment by being free (as in bear) and dependable apologists, always defending said corporations whenever they arbitarily ban, censor or otherwise unfairly treat those with the wrong opinons, often employing the well-known phrase that GP quoted.

GP is implying that those people are about to discover the brutal truth that suppression tactics are perfectly symmetric and care not who employs it against whom.

GP means that those resorting to "freedom of speech is not for companies" are hypocrites. They're defending the right of companies to supress opinions on their services, not because they believe that's fair --actually they're anti-business-- but because they can pressure the companies, threatening their advertisers, so only opinions approved by them will show.

If Twitter goes private and stops depending on ads, they won't be able to exert such pressure and will lose that advantage. Even if Musk is totally fair with moderation, they're going to complain he's not censoring enough.