After Offering To Buyout Twitter For $43 Billion, Elon Faces Pushback From Saudis, 'How Much Of Twitter Does Kingdom Own', Asks Musk
Elon Musk has offered to take over Twitter for $48 billion.
In a regulatory filing on Thursday, Musk proposed to buyout the tech giant for $54.20 per share. That marks a 38 per cent premium to the social media’s last trading price prior to the disclosure of him becoming the largest stakeholder in the company on 1st April.
Earlier this week, the billionaire rejected the offer of a board seat in the company. That move reportedly highlighted his bigger intentions given that becoming a board member would have limited his ownership in Twitter to a little below 15 per cent.
“Since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company,” Musk’s letter to Twitter Chairman Bret Taylor read.
He added, “My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.”
Morgan Stanley has been named as the financial advisor for this offer. Twitter’s response to this proposal is still awaited.
Since Musk made the offer, the Chairman of Kingdom Holding Company, which is Saudi Arabia's diversified investment holding company, rejected his offer. 'Prince' Alwaleed Talal, who is the chairman of Kingdom Holding Company, rejected Musk's offer on Twitter.
Saudi Arabia's Kingdom Holding Company (KHC) owns 5.2 per cent stake of Twitter, making KHC one of the largest shareholder of Twitter.
Musk responded to KHC by replying to their tweet. In his tweet Musk raised two questions, answer to one of which is obvious. The other question is something which has been asked repeatedly by Twitter users in India too, due to the issue of arbitrary censorship, especially when one criticises Islam.
It is worth stressing that Musk asks in his tweet 'how much of Twitter does the Kingdom (of Saudi Arabia) own, directly and indirectly?'. This is important because whilst how much of Twitter the Kingdom Holding Company owns is public, if the Kingdom owns more than 5.2 per cent under a different name isn't public.
One must note that the general population of Saudi Arabia is quite active on Twitter and the platform is used by the monarchy to target and suppress critics of the regime.
Saudi Arabia has also mastered the art of using the platform to mould public opinion tactfully instead of banning the platform outrightly. In other words they have quite skilfully weaponised the platform and discovered that weaponising it by embedding it with their narratives is more advantageous instead of banning it outrightly like China.
The Kingdom's stake in Twitter isn't just another investment. As of now, that is the time of this article's publication, Musk has his reply to the chairman of KHC as the pinned tweet on his profile.
He has also tweeted another poll asking if the decision to accept/reject his offer should be up to the shareholders or the board.
Musk is offering to pay $54.20 per share. From the perspective of fiduciary duty, the goal of a company is maximising the profit for its shareholders. It isn't unrealistic to consider that at $54.20, a lot of shareholders will want to sell their share.
Twitter is a big name but as a company it isn't that profitable, nor is it able to attract advertisers, which is the basic business model of how all these social media companies make money.
Although, Twitter is much more than a mere social media company. Many argue that the outcome of the previous US elections would have been different if the story about Hunter Biden's laptop wasn't censored by Twitter. Remember when Twitter banned the sitting President of US? He is still banned, although he might run again for the Presidency. Does being absent from that platform hamper Trump's chances? Probably yes.
As such, Twitter holds a significant amount of influence and many entrenched power bases use it to wield their power. The coastal elites in America are one of the examples. They have an interest to ensure that the nature of Twitter doesn't change.
Although Musk may have secured financing for his bid, it isn't clear that he will succeed. This is something that Musk himself concedes.
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