Out of the Twitter Blue

Market Meditations | April 26, 2022

Yesterday Twitter’s board approved a $44 billion deal to buy Twitter and take it private. How did this come about and what could it mean?

  • Just over three weeks ago a filing revealed that Elon Musk had bought a 9.2% share of Twitter stock, making him the largest shareholder in the company.
  • Days later it was revealed that Vanguard had pushed him down into second place with an additional purchase, although it is unclear whether this was made with prior knowledge.
  • Observers were then confused when Musk changed his mind and turned down an offer to join the Twitter board, having acquired enough shares to be invited.
  • It turns out that board members are limited in their shareholdings, and so Musk shifted gears by making an unsolicited offer to buy the whole company.
  • Called a hostile takeover, it is against the wishes of current management, including CEO Parag Agarwal, who took over from Jack Dorsey last year.
  • However the board, who should always act in the best financial interests of shareholders, met with Musk this weekend and approved the deal.
  • What this means for the possibility of layoffs for current employees is unclear, and Agarwal was unable to answer many questions in a Monday town hall meeting.
  • When news of the deal broke yesterday, Musk tweeted a statement, saying he was committed to “defeating the spam bots”, and “authenticating all humans”, as well as adding new features and making the algorithms open source.

Never a dull moment for the world’s richest man. But with great power, comes great responsibility.