Musk Reveals His Strategy for a Twitter Takeover
Musk Reveals His Strategy for a Twitter Takeover
During a TED Talk on Thursday afternoon, Elon revealed he has a 'Plan B'
Today, EVERYONE on social media is talking about Elon Musk’s “hostile takeover” of Twitter (even your old high school classmate that barely graduated.)
This morning - the world’s richest Gen Xer filed a deal with the SEC that offers to pay $54.20 per share in cash, which is 38% above the price on April 1st, the last trading day before Musk went public with his stake of about 9%.
But what will Musk do if this initial offer gets rejected?
The Daily Wire reports: “Elon Musk revealed during a TED Talk on Thursday afternoon that he has a backup plan if Twitter rejects his bid to buy the company.
“If, in this case, you are not successful in that the board does not accept your offer, you’ve said you won’t go higher, is there a plan B?” Musk was asked.
“There is,” Musk responded while smiling.
Musk said he would discuss that at another time when asked what his backup plan is.
Here are a few powerful quotes from Musk during today’s interview:
“I think it’s very important for there to be an inclusive arena for free speech. Twitter has become kind of the de facto town square, so it’s really important that people have both the reality and perception that they’re able to speak freely within the bounds of the law.” - Elon Musk
“One of the things I believe Twitter should do is open source the algorithm.”
- Elon Musk
“It’s important to the function of democracy, it’s important to the function of the United States as a free country and many other countries, and to help freedom in the world more broadly than in the U.S.,” Musk said. “Civilizational risk is decreased the more we can increase the trust of Twitter as a public platform, and so I do think this will be somewhat painful.” - Elon Musk
“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. I don’t care about the economics at all.” - Elon Musk
We don’t know at this point if Musk will succeed at this Twitter takeover. This afternoon, investment firm Vanguard entered the drama by increasing its shares in Twitter to 82.40 million shares, which equates to a 10.29% stake - which is currently higher than Musk’s 9% stake.
Interesting point I found on InvestorPlace:
“The “date of event” on the 13G filing was March 31, meaning Vanguard increased its position sometime in March. Securities regulatory provisions state that any institutional investor who owns more than 10% of a company must file a 13G form “within 10 calendar days reporting the holdings as of the close of the month.” Therefore, the date of event signifies Vanguard’s TWTR holdings as of March 31. In February, Vanguard reported an 8.8% stake, so its most recent purchase pushed it above the 10% threshold.”
“Vanguard has an average holding period of 38.62 quarters (or nearly 10 years) for the stocks in its portfolio. As a result, investors should expect the firm to keep its shares of Twitter for the long term. However, Vanguard made its purchase before the Musk acquisition offer. Because of that, it will be interesting to see if the firm adjusts its position based on recent news.”
“Why did Vanguard increase its Twitter stake in the first place? Institutional investors are not required to disclose their reasons behind purchases or sales. Nonetheless, Twitter has experienced major changes this year, such as the departure of former CEO Jack Dorsey. With new CEO Parag Agrawal now on board, it’s likely he will enact different business decisions and goals. Vanguard’s recent purchase may be a stamp of approval for the company’s new leadership.”
Who owns Vanguard?
Vanguard - also called the Vanguard Group - is a uniquely structured investment management company where the shareholders own funds and these funds own the company. Which means the shareholders own Vanguard. The company has no outside investors other than its shareholders.
Vanguard Group is the second-largest investment firm in the world, after BlackRock. As of 2021, Vanguard has over $7.5 trillion in assets under management, which is second to BlackRock’s $9.01 trillion AUM.
Headquartered in Pennsylvania - Vanguard was founded by Jack Bogle. He died in January of 2019 with a personal fortune valued at $80 million. The New York Times says “he regularly gave half his salary to charities.”
Today, the Chairman and CEO of Vanguard is Mortimer J. Buckley. His LinkedIn profile says he’s been with Vanguard over 31 years and as CEO, gets an annual salary of $700,000.
There are no surprises found when I searched Buckley or Vanguard. Unless you are an investment geek, both appear “squeaky clean” and pretty dry and dull.
According to the timing of the transactions, Vanguard increased their shares in Twitter up to 10.29% back in March, before Musk bought his 9% stake in early April. Today, hours after Musk initiated his takeover offer, we just found this out.
That is an interesting coincidence.
Or did Musk fail to disclose his Twitter stock accumulations back in March? A class-action lawsuit alleges Musk violated a regulatory deadline to reveal he had accumulated a stake of at least 5%. The lawsuit contends Musk reached a 5% stake in Twitter by March 14.
Many free speech advocates and conservatives are rooting for Musk to take over Twitter, while progressives are unhinged about the possibility.
News Detectives will continue to follow this story closely.
Hey Matthew, Outstanding analysis, as usual! You are spot on with the tug-of-war now taking place. It is rumored that some of the major stockholders in Vanguard are in the picture I sent you recently. The drama is palpable!