Althouse: "Twitter is nearing a deal to sell itself to Elon Musk, two people with knowledge of the situation said...."

April 25, 2022

"Twitter is nearing a deal to sell itself to Elon Musk, two people with knowledge of the situation said...."

"Twitter’s board was negotiating with Mr. Musk into the early hours of Monday.... The two sides were discussing details including a timeline to close any potential deal and any fees that would be paid if an agreement were signed and then fell apart, they said. The discussions followed a Twitter board meeting on Sunday morning to discuss Mr. Musk’s offer.... An agreement is not yet final and may still apart, but what had initially seemed to be a highly improbable deal appeared to be nearing an endgame...."

The NYT reports.

47 comments:

David Begley said...: This happened very fast.; 4/25/22, 7:01 AM
David Begley said...: I read about Musk’s girlfriend Grimes in Vanity Fair. They have two children: X and Y.; 4/25/22, 7:03 AM
JAORE said...: Somebody 'splain this to me.

Would the board not be liable if they dismissed an offer for more than the going rate for shares? Isn't, at some point, the primary purpose of the board to serve the interests of the share holders?

Fiduciary responsibility does not seem to mean what I thought it did.*

Take Obama and the GM bankruptcy. He screwed the normally head-of-the-line bond holders. Didn't those investment firms holding the bonds fail their clients?; 4/25/22, 7:03 AM
Fredrick said...: The latest earnings report must be bad, which will drop the stock price even further. Sell now before he lowers his offer.; 4/25/22, 7:12 AM
MikeR said...: Of course I'm happy watching Musk blow up twitter and am munching popcorn, but I hope this doesn't lessen his resources enough to endanger the really important things he's trying to do.; 4/25/22, 7:24 AM
Jake said...: Too bad the EU is ringing in a new era of thought police.; 4/25/22, 7:27 AM
Mike Sylwester said...: The sequence of future events:

1) Musk buys Twitter

2) Twitter removes its ban on Babylon Bee

3) Civil discourse in the USA is destroyed; 4/25/22, 7:31 AM
Oh Yea said...: I've already have contacts that use Twitter to discuss college basketball who were saying goodbye when news of this came out last night.; 4/25/22, 7:38 AM
exhelodrvr1 said...: Civil discourse in the USA has been gone for awhile; the Babylon Bee is just exceptional at pointing out the hypocrisy.; 4/25/22, 7:46 AM
J Melcher said...: Musk tweets (a lot of things, some of which may be true) that he hopes to extend the limits on the length of a tweet. From 140 or 280 or whatever the present character limit is to some undefined length.

I suppose that would let Twitter better compete with SubStack ...; 4/25/22, 7:47 AM
hawkeyedjb said...: Critics are correct that this will be the end of Twitter as we know it - that is to say, as a censorship platform. Lots of people will be sad, as will many governments. I expect mass resignations Most of the people who work at Twitter must be firmly against free speech or they wouldn't be there.; 4/25/22, 7:54 AM
Ann Althouse said...: "Would the board not be liable if they dismissed an offer for more than the going rate for shares? Isn't, at some point, the primary purpose of the board to serve the interests of the share holders?"

I think what was key and what the board could not do was to establish that Twitter is worth more than Musk is offering. That's why the position shifted. I'm reading that in the articles, not pretending to be an expert on this topic (which I did follow professionally in the 1980s, but have avoided for the last 30 years).; 4/25/22, 7:56 AM
Bob Boyd said...: JAORE said...
Would the board not be liable if they dismissed an offer for more than the going rate for shares? Isn't, at some point, the primary purpose of the board to serve the interests of the share holders?

Here's an interesting thread on that exact question.; 4/25/22, 8:01 AM
R C Belaire said...: Reminds me a bit of what Trump faced in DC. Sure, he's President, but what about those in the bureaucracy who hate him? Unless Musk cleans out several layers below the C-suite he won't have much of an impact on the product. But good luck to him.; 4/25/22, 8:14 AM
J2 said...: David Begley

Grimes and Musk broke up about a year ago.
Grimes is currently dating Chelsea Manning.; 4/25/22, 8:16 AM
robother said...: I assume Twitter is a Delaware corp. and as I recall under Delaware law, the Board's duty in a tender offer is clear: get the best price for the company shareholders. Absent a "White Knight" (boy, that term didn't age well) who'll pay more to keep the board in power, they have no choice but to sell to Musk on the best terms they can negotiate.; 4/25/22, 8:18 AM
Rusty said...: JAORE
They are going over the VALUE of the shares. Not the price. Once the value has been determined they will haggle over price.; 4/25/22, 8:21 AM
ConradBibby said...: If Musk acquires Twitter, what does he expect to happen, and what will happen? Can he turn it back into a free speech platform or will loyal leftists within the company sabotage that effort at every turn? If he is able to make meaningful changes, will the left simply abandon Twitter and set up shop somewhere else -- or does that not even matter because, even if there are popular leftist platforms that will continue to practice censorship, Twitter will still be able to get out the stories and perspectives that Big Tech was previously able to suppress?; 4/25/22, 8:21 AM
gspencer said...: "3) Civil discourse in the USA is destroyed"

Happened a long time ago. And look to the always aggressive left as the reason.; 4/25/22, 8:21 AM
Howard said...: I'm sure Musk just wants you people to STFU about being a cohort of poor deprived oppressed whining crying blame gaming POS. Affirmative action for deplorables.; 4/25/22, 8:25 AM
Beasts of England said...: Alea iacta est. Elon’s offer has been accepted, per Reuters.; 4/25/22, 8:47 AM
rcocean said...: From what I've read Twitter isn't really worth $54/share. Its a social media company that has societal power. That's why rich people want to own it. Perhaps Musk watched Citizen Kane:

You're right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars *next* year. You know, Mr. Thatcher, at the rate of a million dollars a year, I'll have to close this place in... 60 years.

Interesting factoid: The rich man who bought the WaPo lost money every year from the Mid-30s to the early 50s. It only started turning a profit, when he bought one of his comepetitors.; 4/25/22, 8:58 AM
Maynard said...: Don't get too excited about Elon Musk owning Twitter.

He has some libertarian tendencies, but he is also a very smart businessman who knows how to make money. If Twitter cannot make money as a censorship free vehicle, Musk won't change it that much.; 4/25/22, 9:04 AM
Amadeus 48 said...: One of the defensive tactics that could be used (now out of favor) would be to demonstrate that the company has a plan to increase shareholder value beyond the offer price. That tactic is usually a bluff or a delusion and generally results in either a capitulation by the company or a new, higher bidder (a greater fool?).

I am skeptical still that Musk's bid will close because I doubt that there is more value to be squeezed out of Twitter, which seems to be largely a snark machine with lashings of woke propaganda and censorship of heterodox views. In other words, Musk may come to believe that he is overpaying and bail out of the deal--perhaps at the cost of paying a break-up fee.

Who has time for Twitter? Retirees? Losers? The underemployed? Those politically committed to free stuff? Oh, yeah--journalists. They can demonstrate their fidelity to the Party.; 4/25/22, 9:13 AM
D.D. Driver said...: It's odd that the most likely scenario, here, is one that no one is considering. Maybe Musk is just trying to make a lot of money. Twitter is a strong brand with a surprisingly durable moat. How many Twitter competitors have we seen arrive and languish?

Maybe Musk sees an opportunity to replace the management, no longer let the inmates run the asylum, and oh I don't know focus on making money.

If all the wokesters quit Twitter, who cares? How many programmers and engineers would love to work for Elon Musk? For every crybabies that leaves, there are probably 5 talented coders that would gladly take that job.; 4/25/22, 9:14 AM
Temujin said...: I heard an interesting podcast the other day on the Elon vs Twitter thing. The podcast was "All In". Four very connected men from various fields discussing various things. I'm sure they all know Elon and the people on the board of Twitter. But one of the guys remarked that Elon has gathered such a dominant technical team around him for his existing businesses, that they could clear the problems with Twitter in a very short time. The remark was something like Twitter's team is so mediocre and Musk's team is so superior to any on the planet, that if Elon took one of his key people, he could turn the problems with Twitter (bots, lousy algorithms, 'moderation') around in a month. If Elon put three of his people on the job they'd have it corrected in a week.

This may be a bit of hyperbole, but I'll bet the picture it paints is not far from the truth.

If this gets completed, a new window to a new direction may be opening, and we won't know where it leads until we're into it.; 4/25/22, 9:19 AM
Left Bank of the Charles said...: I thought Musk would have had to raise his offer significantly, but with the stock market imploding, I suppose he effectively has. This is where the board not having much skin in the game helps him, they don’t have incentive to get the highest price they can.; 4/25/22, 9:21 AM
Mike (MJB Wolf) said...: Question for people who fear Musk's acquisition: What has the Twitter board done to increase share value* over the last ten years? The stock has a rather flat trend since 2014 because there is no mechanism for it to become profitable.

*Link: https://www.google.com/finance/quote/TWTR:NYSE?sa=X&ved=2ahUKEwi91vzmtK_3AhVnIEQIHbglBPQQ3ecFegQIIRAg&window=MAX; 4/25/22, 9:24 AM
John henry said...: I've been watching studying and teaching about things like this since the 70's. I STILL do not understand why the board of any public corporation has anything at all to do with a corporate buyout. Yes, they should make a recommendation to the owners A/K/A stockholders as to whether it is a good offer and whether they should sell or not.That seems a legitimate function.

But the company does not own the stock, individuals (including corporate individuals) do. It is, or should be, strictly up to them to decide whether to sell or not. I see nothing for the board to negotiate. If it is a bad deal, let the owners decide not to sell. If it is a good deal, let the owners sell.

I don't understand what there is to negotiate, other than Musk with stockholders.

That is the way it should be with all public corporate buyouts. I know it never has been. I just have never understood why.

Beyond that the board members have no dog in this fight other than their director fees. Especially in Twitter's case where, other than Jack Dorsey, the entire board has something like 700 shares between them. Most of them do not even have accounts on Twitter. That particularly seems bizarre. If they do not have an account that they use, at least occasionally, they cannot understand how Twitter works. If they cannot understand how it works, they cannot govern the company effectively.

John LGKTQ Henry; 4/25/22, 9:28 AM
John henry said...: Rusty, the value is the price.

If the owners elect to sell their shares at $54, that is the value. If they don't, the value is something else.

Anything else is pure speculation.

John :GKTQ Henry; 4/25/22, 9:30 AM
John henry said...: Robother,

Could we call Elon a "Black Knight"?

Or, more "correctly" an "African-American knight"?

John LGKTQ Henry; 4/25/22, 9:33 AM
Curious George said...: "MikeR said...
Of course I'm happy watching Musk blow up twitter and am munching popcorn, but I hope this doesn't lessen his resources enough to endanger the really important things he's trying to do."

Musk: "This is not a way to make money," Musk said at the TED conference. "My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization."

Musk thinks it's really important. I think he is right. It's more important than electric cars...everybody is making them now, and rockets.; 4/25/22, 9:37 AM
Bruce Hayden said...: Bob Boyd’s link was interesting. The problem that I see with the Board defying Musk in his takeover here is that they don’t seem rot have a viable claim that they can manage the company better than he can. Their management policy seems to be to double down on censorship and enforcing political correctness? How is that going to benefit the stockholders, and in particular, the value of their stock? Sure, the employees seem to think that they would benefit by keeping the present Board in place, and backing their censorship. But that isn’t where the Board is supposed to owe their primary loyalty - which is rather to the stockholders.

My view is that Musk has the better argument because the current management has selected a diminishing market to exploit - those willing to be censored by the left. It’s kinda like the Fox News marketing strategy of catering to a market niche - half the market. The current corporate management is focusing on what is likely going to be less than half its potential market, by censoring everyone else. Why would any rational person believe that to be a viable marketing strategy?; 4/25/22, 9:41 AM
GRW3 said...: I'm assuming a lot of institutional holders have looked at that 20%+ premium and, in a season of losses, have been pushing hard to get those bucks.; 4/25/22, 10:14 AM
Amadeus 48 said...: One thing became clear to me in 40 years of practicing corporate law: at a certain point, the "deal" becomes the client.

In other words, all efforts on both sides turn to find a way around difficulties and obstacles and get to a closing rather than recognizing that some problems cannot be solved. Often, the can is just kicked down the road, and problems are left for the buyer to sort out. Post-closing strategies--like post-closing price adjustments funded by an escrow or a post-closing earn out depending on performance--are always difficult to carry out.

That is why so many M&A transactions turn out to be duds for the buyers. Ask Warren Buffett about the $50 billion deal he went into with 3G to buy Kraft Heinz--the brand names were over-valued by at least 50%. But the professionals walk away with their fees if the deal closes.; 4/25/22, 10:44 AM
JAORE said...: Twitter's team is so mediocre and Musk's team is so superior to any on the planet, that if Elon took one of his key people, he could turn the problems with Twitter (bots, lousy algorithms, 'moderation') around in a month. If Elon put three of his people on the job they'd have it corrected in a week.

A wonderful lesson for all the inmates that think they are in charge of the asylums.... if they are capable of learning.; 4/25/22, 11:01 AM
J Melcher said...: Many criticize Musk (with some justification) for Tesla's early reliance on Federal subsidies. The government paid for solar tech -- Solyandra, for instance -- so Musk went into that market. Electric cars, and now SpaceX taking military contracts to support the ISS and other government projects in orbit.

IF it's true that Musk's profits depend on good friendships in the US government, does the following make sense?

1. Buy Twitter.
2. Allow Trump back on the platform.
3. Wait. Don't take sides but,
4. Allow the most significant artist of Twitter to do what he does.
5. Attend the 2nd Trump inaugural.
6. Have a little conversation... "Congratulations, Sir. By the way, if you could see your way clear, there's a little issue I wish you'd investigate, a small favor I would request y..."; 4/25/22, 11:04 AM
Original Mike said...: "He has some libertarian tendencies, but he is also a very smart businessman who knows how to make money. "

IDK, does Tesla make money? Does SpaceX? Not saying they don't; just asking.; 4/25/22, 11:06 AM
Narayanan said...: Q: does Twitter need to have 'present valid complaint from real human user' before the community standard is invoked to shut down / ban a tweet? and take advantage of section 230 [?]

or can Twitter go haring off on its own?; 4/25/22, 11:12 AM
Original Mike said...: Blogger ConradBibby said..."If Musk acquires Twitter, what does he expect to happen, and what will happen? Can he turn it back into a free speech platform or will loyal leftists within the company sabotage that effort at every turn? If he is able to make meaningful changes, will the left simply abandon Twitter and set up shop somewhere else -- or does that not even matter because, even if there are popular leftist platforms that will continue to practice censorship, Twitter will still be able to get out the stories and perspectives that Big Tech was previously able to suppress?"

It will be fascinating to watch. And given Musk's move fast and break things approach I don't think we'll need to wait long to find out. I don't see how the loyal leftists can sabotage him. They did it to Trump, but Twitter is tiny compared to the federal government. They may take their ball and go home, but that in itself will be an emperor has no clothes reveal. And I hope that's not what happens.

I, for one, am looking forward to sensible people being able to respond to the nutters on an open public forum. I agree with Musk on the importance of an open platform where ideas can be debated. I don't think he's in it to make money.; 4/25/22, 11:49 AM
Narayanan said...: Blogger Bruce Hayden said...
.... But that isn’t where the Board is supposed to owe their primary loyalty - which is rather to the stockholders.
=========
I am reading that recently this string of letters has changed in many instances from /Stockholders/ to wokist /Stakeholders/

Has twitter made the change? ...
Twitter Mission, Vision & Values
Twitter Mission Statement
Reach the largest daily audience in the world by connecting everyone to their world via our information sharing and distribution platform products and be one of the top revenue generating Internet companies in the world.

Twitter Vision Statement
We believe in free expression and think every voice has the power to impact the world.

Twitter Values
What are Twitter's core values? Grow our business in a way that makes us proud. Recognize that passion and personality matter. Communicate fearlessly to build trust. Defend and respect the user's voice. Reach every person on the planet. Innovate through experimentation. Seek diverse perspectives. Be rigorous. Get it right.; 4/25/22, 11:53 AM
Terry di Tufo said...: Highly unlikely? Only from Musk’s perspective (who wants to own that business?). Shareholders: haven’t made any money since Twitter went public, Musk is offering a premium and anyone who didn’t wishes they had bought shares in Tesla. The financial illiteracy about this in the press has been astonishing.; 4/25/22, 11:54 AM
Left Bank of the Charles said...: The latest Elon Musk tweet: “I hope that even my worst critics remain on Twitter, because that is what free speech means”

Is that what free speech means, generating internet traffic for a guy you don’t like?; 4/25/22, 12:31 PM
Original Mike said...: "Is that what free speech means, generating internet traffic for a guy you don’t like?"

Free speech means letting both sides of a question speak. Not surprising you don't know that.; 4/25/22, 12:41 PM
n.n said...: The value of Twitter is not in the software, or even in the community commodities; but, rather in the infrastructure that services it. Fortunately, Musk has an independent infrastructure that cannot be easily cancelled by either a network or steering engine.; 4/25/22, 1:23 PM
Original Mike said...: The latest Elon Musk tweet: “I hope that even my worst critics remain on Twitter, because that is what free speech means”

You could question his sincerity, but how in the world could you question the truth of the statement? Yet, that is what the leftists have been doing.; 4/25/22, 1:47 PM
effinayright said...: Original Mike said...
"Is that what free speech means, generating internet traffic for a guy you don’t like?"

Free speech means letting both sides of a question speak. Not surprising you don't know that.
****************

IIRC "Left Back at the Charles" has hinted he/she has a legal background.

If so, he/she knows damn well what Free speech means. He/she simply rejects and jeers at the concept.; 4/25/22, 3:00 PM