Tech
Tushar Gupta
Apr 14, 2022, 05:44 PM | Updated Apr 15, 2022, 10:44 AM IST
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At the end of Dawn of Justice, Henry Cavill’s character, Superman, asks Batman, played by Ben Affleck, about how he was able to get his parental house back from the bank. With all his swagger, Batman casually replies, ‘I bought the bank’. In the real world, and for Elon Musk, it is all about the dawn of justice and free speech on the internet, and therefore, merely days after acquiring a nine per cent stake in Twitter, he has made an offer he believes the Securities and Exchange Commission can’t refuse. Elon Musk wants Twitter, every penny and per cent of it.
The Numbers
First things first. Yes, Musk can afford to buy Twitter, given he can make the humble brag of being the world’s richest person with a worth of around $260 billion. Twitter’s valuation, however, according to Bloomberg estimates, is around $37 billion.
Musk has offered an all-cash deal at $54.20 per share, representing a 54 per cent premium over the closing price of January 28, 2022. This would put the value of Twitter at $43 billion.
Twitter’s share prices have not been in the $54 territory for almost six months now, even though the buyout news had the shares in green in pre-market trading. As of now, Twitter’s share price is around $48.
The Cause
Just as Tony Stark bragged about privatising world peace, with all the good reasons, in Iron Man 2, Musk wants to privatise one of the many social networking platforms there are. Assuming he does manage to privatise Twitter completely, it won’t change the way Meta functions, but for Musk, owning Twitter has more to do with ensuring free speech around the globe.
In his 281 characters message to the chairman of the Twitter board, Musk stated that Twitter could not thrive in its current form, and if at $54.20 per share in cash, his offer was not accepted, he would have to reconsider his position as a stakeholder in the platform. Maybe he is bored, or brilliant, or perhaps both, but his passion as a 'free speech absolutist' is without a doubt. Merely a few weeks back, Musk refused to block several Russian news outlets on his Starlink network, saying his company wouldn't do it unless forced on gunpoint.
The Concern
While Musk has been vocal about many issues on Twitter, including Twitter itself, the takeover might not be as smooth as expected.
Firstly, will the board accept a share price given Twitter was trading at around $65 between February and July last year?
Two, as much as the platform is ripe with potential, its share price has not been in the $54 neighbourhood, a price Musk has offered for most of its stock market existence. Thus, will the board consider this offer, if the stakeholders find it to be a good deal, for Musk’s exit will only hammer the Twitter stock? It must be noted that the share price of Twitter was around $35-odd before Musk made his moves.
Lastly, will the SEC approve of it, and if it does, what precedent it will set for such takeovers and buyouts, given the American Congress, time and again, has talked about breaking up Big Tech and ensuring fair competition. Therefore, even in the name of free speech and liberalism, will a business move like this sit well with the SEC, and other regulatory authorities?
If it works, and even if it does not, this deal will set a precedent for the future, for both free speech and Big Tech.
Got to give it to Musk here, for $43 billion is quite a price to pay for an edit button.
Tushar is a senior-sub-editor at Swarajya. He tweets at @Tushar15_