Elon Musk runs into the Twitter poison pill
If you want a classic example of "small," a pretty good place to look is on the hallowed heights of the Twitter elite.
Elon Musk made Twitter a $43-billion offer to buy the whole company, which amounted to a 38% premium to what the stagnant stock had been trading at before Musk laid down cash to buy his first share. Any normal person would have taken it, as he'd find himself very, very well compensated along with everyone else who owned shares in the company. Any ethical person would put the Musk offer out to shareholders to vote, given the potential payout. But Twitter's board is none of those things.
They reacted like a snail that had just had some salt dumped on it, a panicked squid, a disturbed Kraken — spewing clouds of ink and bubbles, with flying suction-cup legs.
According to CNBC:
The board voted unanimously to adopt the plan.
Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter's outstanding common stock without the board's approval, other shareholders will be allowed to purchase additional shares at a discount.
The plan is set to expire on April 14, 2023.
This is a stunningly bad move, given that it dilutes the share value of Twitter's little-guy shareholders. Twitter's barons didn't care — they tried to gaslight the small shareholders by claiming in their press release that they were just protecting shareholder value, and implying that this sudden interest the board had in instituting a poison pill had nothing to do with their loathing of Musk's offer.
The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter. The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.
The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders.
See the pattern? One, the shareholders get stiffed, watching the value of their battered stock going down. Two, they get told by the board that it's really a good thing, as if everyone who bought shares in this company did so out of a sentimental love for their company for its own sake, or because the stock certificates would look so pretty on their mantles. This is garbage: stocks, as Investor's Business Daily's founder, Bill O'Neill, memorably used to explain to his company's employees, "are only good if they go up."
Twitter would have you think otherwise. And they open themselves and their company up to shareholder lawsuits if they don't have a clause in there about protecting themselves, along with some insurance to go with it if they do.
The reality is, they revealed their hand.
CNBC notes this:
Such a move is a common way to fend off a potential hostile takeover by diluting the stake of the entity eying the takeover.
But CNBC gets it only half-right. What's not common is adopting such measures right as the takeover offer is happening. Normal boards adopt these "poison pills" well in advance of any potential hostile takeover in a plan-ahead move to keep the matter stable.
These guys didn't — they didn't plan at all — they assumed they were too big, too important, and any billionaire with money to buy shares in their company would inevitably be as progressive and left-wing as they are.
That they made this belated move obviously reveals that they're in a panic about their potential new owner, who has explicitly stated that he wants to buy the company in order to restore the platform's free speech principle, something it benefits from via Section 230 protections from Congress, and they are reacting now by spewing and frothing in a bid to obscure...something.
One of those things is that they've testified under oath before Congress that they never ban people for political reasons and have no biases. Nobody believes that — they ban conservatives all the time, including President Trump, while leaving President Putin and the Taliban completely free to tweet. But up until now, they've gotten away with that gaslighting since no one has the goods on them to prove otherwise.
Musk, though, should he buy the company, might get his hands on the proof of their systematic suppression of conservatives' voices, and that could be a problem. That's the ring that the Gollums of Twitter are guarding.
Sundance at The Conservative Treehouse has even more interesting ideas about who among the Twitter elite might be opposing this:
Twitter is not making a decision to decline the generous offer by Elon Musk because of stewardship or fiduciary responsibility to shareholders. The financials of Twitter as a non-viable business model highlight the issue of money being irrelevant. Twitter does not and cannot make money. Growing Twitter only means growing an expense. Growing Twitter does not grow revenue enough to offset the increase in expense.
There is only one way for Twitter to exist as a viable entity, people are now starting to realize this.
What matters to the people behind Twitter, the people who are subsidizing the ability of Twitter to exist, is control over the global conversation.
Control of the conversation is priceless to the people who provide the backbone for Twitter.
Once people realize who is subsidizing Twitter, everything changes.
That's the fight.
That someone would have to be the U.S. government, Sundance argued earlier, because the platform can be subsidized only by an entity with the resources of the U.S. government to make the operation work at all, it doesn't turn a profit when it gains more users, and more users only add to its huge server expenses. He wrote about that here.
If it's true, it would explain the callous behavior of the Twitter board toward its small shareholders, and its indifference to company profit and value in general. Government is about power, business is about money, yet these Twitter elites are saying that power matters more to them than money. That's weird stuff coming from a business. They don't seem to operate on a profit basis, and anyone involved with this company is a victim.
Image: Pixabay, Pixabay License.