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Twitter Inc. shareholders voted on Sept. 13 to agree to Tesla CEO Elon Musk’s $44 billion proposal to buy the company and take it private, even though Musk is trying to scrap the deal. In July this year, Musk announced plans to terminate the deal, and Twitter took him to court, asking him to honor the deal, arguing that he was obligated to complete the deal even if he changed his mind. The case is expected to go to trial in October.
Reviewing the Twitter acquisition: Musk’s “Thirty-six Strategies”
It has been more than two months since Musk’s acquisition of Twitter, and it can be described as a wave of unrest. You come and go on both sides, see tricks and tricks, it’s so lively.
Looking back at the beginning and end of the Twitter acquisition, the key point of the standoff between the two sides is the issue of Twitter’s fake accounts.
Musk has targeted this many times, causing Twitter to step back and eventually have to hand over all permissions. And Musk’s step-by-step approach also allowed him to firmly control the initiative in this acquisition.
Darkness Chencang
As the so-called market is like a battlefield, Musk’s strategy of acquiring Twitter has won the “Sun Tzu’s Art of War”.
On March 25th, Musk launched a poll on Twitter “whether Twitter has safeguarded everyone’s freedom of speech”. More than 2 million people participated in the vote, and 70% of them believed that “Twitter did not maintain its own freedom of speech.” Just when the public thought that Musk was questioning Twitter, in private, he began to continuously increase Twitter’s stock.
On April 4, Musk threw a bombshell, announcing that he had purchased a 9.2% stake in Twitter, becoming Twitter’s largest shareholder at the time. As soon as the news was released, Twitter’s stock price soared from $39.31 per share to $45.08 per share, an increase of 14.68%.
A good trick, “Darkness Chencang”, caught Twitter off guard.
According to the data, Musk bought 5% of Twitter’s shares as early as March 14, and according to regulations, he should submit an explanation to the SEC before March 24. But in fact, Musk not only delayed the public information for more than ten days, but also released a vote online to try to use public opinion to influence Twitter’s stock price, not ruling out the possibility of adding positions at a low price.
anti-customer
On April 5, Twitter filed a filing with the SEC asking Musk to join Twitter’s board. Unexpectedly, Musk did not follow the routine and refused to join the Twitter board. The sudden reversal came as a surprise and sparked speculation about Musk’s intentions to buy Twitter. According to SEC regulations, if Musk joins Twitter’s board, his stake cannot exceed 14.9%.
On April 14, Musk suddenly announced that he would acquire 100% of Twitter’s outstanding shares at a price of $52.40 per share, a total price of about $44 billion, and take it private. However, Twitter didn’t want to be acquired in the first place. The next day, Twitter launched a “poison pill” to block Musk’s acquisition plan. In the face of Twitter’s deterrence, Musk did not panic at all. He shouted on Twitter investors and the board of directors to put pressure on the public platform, and also met privately with other Twitter shareholders to persuade them to believe in his determination and consider directly Propose a takeover to shareholders.
On April 25, Twitter announced that it had accepted Musk’s $44 billion offer to buy the company, with Musk personally responsible for half of the acquisition financing. Since the signing of the acquisition agreement, Musk has been “anti-customer” and has been questioning the problem of fake Twitter accounts.
out of nothing
On May 14, Musk tweeted that his $44 billion deal to buy Twitter was on hold as he wanted to learn more about Twitter’s estimate that spam and fake accounts account for less than 5 percent of its total users. . The next day, the Twitter CEO sent 13 tweets to explain the statistical method of fake accounts and to ensure that Twitter has kept such accounts below 5% for the past four quarters. For this explanation, Musk only responded with a “poo” emoji.
On May 17, Musk said that fake accounts on the Twitter platform accounted for as high as 20%, four times the official Twitter account. As a result, his acquisition of Twitter could not go ahead. This trick of “creating something out of nothing” makes Twitter unspeakable. Although fake accounts are bound to exist, Twitter cannot prove that fake accounts only account for 5%, but Musk’s claim that fake accounts account for up to 20% is not true. Evidence, just his personal opinion. Moreover, Musk made it clear at the time of the acquisition that one of the purposes of his acquisition was to manage the junk number issue. Therefore, it is unlikely that he would have discovered that fake accounts were a serious problem more than a month after he proposed the acquisition.
On May 25, Twitter shareholders launched a class-action lawsuit in California on Wednesday, alleging that Musk manipulated Twitter stock through statements and tweets about his $44 billion acquisition. Shareholders argue that Musk knew Twitter had a certain amount of spam and fake accounts before he bought it, and that the company had reached an $809.5 million settlement in September 2021 over its inflated accounts of its users Number and growth rate charges. They also highlighted which clause in the acquisition contract allowed Musk to put the deal on hold due to spam and fake accounts.
walk up
On June 3, Twitter said that the regulatory waiting period had expired, clearing a roadblock for the acquisition.
On June 6, Musk’s legal team sent a letter to Twitter. The lawyer believed that Twitter’s refusal to provide Musk’s request for spam account data was a “serious breach” of the acquisition agreement, and Musk therefore had the right to terminate the acquisition.
Musk’s threat to “go ahead” made Twitter panic.
Since Twitter accepted Musk’s takeover proposal, the entire company has entered a state to welcome the arrival of a new boss. Since the end of April, Twitter has suspended hiring, started various cost cuts, and fired two executives in charge of product. Under the large-scale adjustment, people in the company were panicked, many employees began to slack off, and the company’s executives had to hold special meetings to stabilize the morale of the army. In response to Musk’s repeated use of spam accounts, Twitter insisted that the company has provided Musk with relevant information in accordance with the terms of the contract, and Twitter is committed to ensuring that the acquisition is completed in accordance with the agreed price and terms.
On June 8, under Musk’s “serial plan”, Twitter had no choice but to compromise. Twitter’s board plans to comply with Musk’s request to provide access to Firehose, the Twitter platform’s complete raw database, a stream of more than 500 million tweets posted daily. This means that Musk will have complete control over the tweets from real Twitter users.
Obviously, Twitter’s every step of compromise has revealed their willingness to successfully complete the acquisition transaction, and Musk now has the absolute initiative.
Musk’s net worth has shrunk by 74 billion US dollars, and he wants to lower the price?
This acquisition drama has been staged so far, and it seems that neither Musk nor Twitter has benefited.
On April 4, Tesla’s stock price has rebounded from the low in mid-March to $1,145.45 per share, not far from the all-time high of $1,229.91 per share in November 2021. But Tesla’s strong rebound came to an abrupt end after Musk announced that he held a 9.2% stake in Twitter that day. As of the close of U.S. stocks on June 8, Tesla reported $725.6 per share, an increase of 1.25%, with a market value of $751.73 billion. Musk’s personal wealth has shrunk by about $74 billion over the period, according to the Bloomberg Billionaires Index.
On the other hand, Twitter’s financial situation is indeed not very optimistic. Twitter announced its results for the first quarter of this year in April. The financial report showed that the company achieved revenue of US$1.2 billion, a year-on-year increase of 16%, which was lower than market expectations of US$1.225 billion; net profit reached US$513 million, compared with US$68 million in the same period last year. It beat market expectations for a loss of $169 million. Divided by business, its advertising revenue in the quarter was $1.11 billion, up 23% year-on-year, while subscription and other revenue was $94 million, down 31% year-on-year, and 5% year-on-year after deducting the impact of the sale of MoPub. In addition, its operating loss was $128 million, with an operating margin of -11%, compared with an operating profit of $52 million and an operating margin of 5% a year earlier.
Twitter’s stock price has recently fluctuated around $40 per share, which has completely erased all the gains since Musk announced his purchase of Twitter shares, and it is a long way from the purchase price of $54.2 per share. In fact, in the context of the Fed raising interest rates, the entire US stock technology sector has shown a significant downward trend. As of the close of U.S. stocks on June 8, Twitter reported $40.45 per share, an increase of 0.80%, with a market value of $30.91 billion.
Musk’s recent series of “saucy operations” are either to withdraw from the acquisition and stop the loss in time, or to use the exit as a threat to pull Twitter back to the negotiating table and renegotiate the acquisition price.
According to the acquisition contract, Musk would have to pay Twitter a $1 billion “breakup fee” to withdraw from the deal and could face additional lawsuits for damages. There is a high probability that Musk will not give up on acquiring Twitter. $1 billion is completely a piece of cake for Musk. What really makes him unable to let go is the traffic of Twitter as the world’s largest social platform. Privatizing Twitter is not only to maintain its own influence, but also to buy the right to speak.
Many analysts pointed out that Musk is likely to think that spending $44 billion to acquire Twitter is “expensive” and try to achieve the purpose of “lowering the price” through some strategies. This strategy is not uncommon in the history of corporate mergers and acquisitions, the Tiffany acquisition being an example. After the outbreak of the new crown epidemic, the luxury goods giant LVMH Group threatened to withdraw from the acquisition of the American jewelry brand Tiffany. After several rounds of lawsuits, Tiffany finally agreed in January 2021 to reduce the purchase price by $425 million to $15.8 billion. make a deal.
Now, in the face of Twitter’s compromise, I don’t know how Musk will attack next, and how this drama will end is still full of unknowns. However, regardless of the outcome, this acquisition is enough to leave a deep impression on business history.
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Disrupt operations as you wish! Twitter formally sues Musk to complete acquisition deal
Social giant Twitter has formally sued Tesla CEO Elon Musk for $44 billion to buy the social media company.
On July 12, local time, Twitter Chairman Bret Taylor said on Twitter that he had filed a lawsuit in the Delaware Court of Chancery, asking Elon Musk to perform his contractual obligations, and shared a link to the complaint.
Musk then tweeted sarcasm.
The lawsuit was filed Tuesday in Delaware Chancery Court, CNN reported. In the complaint, Twitter’s lawyers said they were seeking to prevent Musk from further breaching the agreement and “to force the merger to close, subject to the satisfaction of a few outstanding conditions.”
“In April 2022, Elon Musk and Twitter entered into a binding merger agreement, committing to do his best to close the deal,” the complaint states. “Now, less than three months later, Musk has refused to honor His obligations to Twitter and its shareholders because the agreement he signed is no longer in his personal interest.”
“After publicly showing Twitter, proposing and signing a merger agreement in favor of the seller, Musk apparently believes that he — unlike any other party under Delaware contract law — — Free to change your mind, discredit the company, disrupt company operations, damage shareholder value, and leave.”
The Wall Street Journal said Twitter asked to expedite the case, saying it would protect its shareholders from continued market risk and operational damage from Musk’s attempt to intimidate out of an airtight merger deal. Expedited cases in the Chancery Court usually take months, not months or years.
CNN noted that the deal could go into a lengthy court battle to determine whether Twitter can force Musk to complete the acquisition and become its owner, or at least make him pay the $1 billion termination fee stipulated in the original agreement.
Earlier, Musk said in a letter to Twitter’s lead lawyer late on July 8, local time, that he wanted to terminate the $44 billion acquisition agreement. In a letter on Friday, Musk’s lawyers said Twitter had grossly violated multiple terms of the agreement and claimed the company withheld data Musk requested to assess the number of bots and spam accounts on the platform.
In response, on July 11, local time, Twitter’s legal team hit back in a letter, calling Musk’s attempt to terminate the agreement “invalid and wrong,” claiming that Musk himself violated the agreement, and asking him to insist in the end.
It is worth noting that for this merger, the legal teams hired by both Twitter and Musk are equally luxurious.
According to Fox News, Twitter has hired a well-known M&A law firm, Wachtell, Lipton, Rosen & Katz LLP, to sue Musk after Musk announced the termination of its acquisition of Twitter. By hiring the firm, Twitter has access to lawyers including Bill Savitt and Leo Strine. Savitt is among the top litigators; Strine served as a justice in the Delaware Chancery Court, where the case will be heard.
Musk has hired law firm Quinn Emanuel Urquhart & Sullivan LLP. The law firm, which helped Musk successfully win a defamation lawsuit against a diver at a cave rescue in Thailand in 2019 over a “pedophile” defamation, is representing Musk in a shareholder lawsuit related to taking Tesla private.
CNN quoted some analysts as saying that Musk was just looking for an excuse to pull out of the deal, which appeared to be overpriced after Twitter’s stock price and overall tech market slumped. And Tesla’s stock has also fallen sharply since Musk agreed to the deal, which Musk relies in part on to fund the deal.
Source: CCTV
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