It is a widely acknowledged fact that Elon Musk is a paragon of strategic acumen and manipulation. The billionaire entrepreneur has cultivated a reputation for outwitting his rivals and undertaking audacious maneuvers that others might consider imprudent. Therefore, it is not far-fetched to postulate that Musk could have potentially deceived Twitter into selling itself to him by feigning disinterest in acquiring the social media behemoth.
The crux of this tactic would have been for Musk to publicly avow that he had no inclination towards procuring Twitter. This would have been a calculated move to disorient any potential adversaries and evade attracting the attention of federal regulators, who may have been inclined to impede a sale if they believed it would result in an over-concentration of power.
Simultaneously, Musk would have been surreptitiously toiling in the background to construct a case for why Twitter would be a quintessential acquisition objective for him. He would have likely emphasized the company’s enormous user base, which would have provided him access to a colossal audience for his various ventures, including Tesla, SpaceX, and The Boring Company. He would have also likely highlighted Twitter’s robust brand and reputation for fostering discussions around trending topics and current events.
Once Musk had convinced Twitter’s management and board of the strategic benefits of a sale, he would have then tendered an offer that was irrefutable. By this juncture, any competition would have likely withdrawn, and federal regulators would have been less likely to block the deal given that Musk had previously stated he had no interest in buying the company.
Twitter Investors Take The Bait and Force Twitter Sale While Elon Acts Disinterested
Remember the days when Elon Musk and Twitter mentioned in one sentence only mean one thing. The billionaire has made another funny or maybe, controversial tweet. Nowadays, it’s not like that. Elon Musk said Twitter should convert its headquarters in San Francisco to a homeless shelter since no one shows up anyway. From there, things escalated.
The Tesla and SpaceX CEO is now trying to have ownership of Twitter. On April 4, Elon Musk revealed a 9.1% stake in Twitter. That made him Twitter’s largest shareholder. Then, 10 days later, he proposed to buy Twitter for $44 billion or $54.20 per share.
To finance this deal, Elon Musk sold and pledged a chunk of his Tesla holdings.
Elon Musk said in the letter sent to Twitter Chairman Bret Taylor that he believes Twitter can be the platform for free speech. He adds that free speech is important for a functioning democracy. The contents of the letter were disclosed in a security filing.
Musk says that Twitter needs to be private. It will enable the platform to “thrive and serve free speech.” According to him, Twitter, in its current state, can’t do either of those.
The Tesla CEO says this is his best and final offer. If Twitter decides not to accept it, Musk says he has to consider his position as a shareholder.
Many people would think: “It’s news about a greedy billionaire trying to earn even more money.” But Musk says he is not acquiring Twitter to profit from it. He says that he just wants to realize Twitter’s potential for civilization’s future.
However, Twitter shareholders beg to disagree. They are suing Elon Musk and Twitter itself for poor handling of the deal. They allege that Musk misbehaved to benefit from it.
The Reason
Twitter shareholders are suing Elon Musk and Twitter for how poorly they handled the acquisition bid. They alleged that Musk violated California corporate laws in multiple ways.
The shareholders claim that Musk released false information and manipulated the market to create chaos at Twitter’s San Francisco headquarters.
Contrary to what Elon Musk says, the shareholders claim he benefited financially from delaying the disclosure of his stake in Twitter. Concealing his plan to become a board member of the company also allowed him to profit.
Furthermore, they claim that Elon Musk made several “misleading” tweets. For example, he announced that his bid to takeover Twitter was on hold through a tweet. He said the reason was he doubts the reported number of fake accounts on Twitter.
Twitter claims less than 5% of its monetizable users are fake accounts. But Elon Musk’s tweet makes the public not believe it. Since Musk has more than 95 million followers, this tweet hurt Twitter’s reputation.
And so, the shareholders claim that it is an attempt to manipulate the market. On top of that, Elon Musk doubled down on the allegations by saying the deal cannot go forward. Now, people would think that the number of fake accounts on the platform is indeed not only 5% of its monetizable users.
Heresniak v. Musk et al
Investor William Heresniak filed the proposed class-action lawsuit at the US District Court for the Northern District of California. A class-action lawsuit is filed or defended by a person on behalf of a group. William Heresniak said he acted on himself and “all others similarly situated.”
Frank Bottini, one of the Twitter investors’ lawyers, spoke with the BBC. They said investors filed the lawsuit because Musk “continues to disparage the company he wants to buy for $44 billion. His goal was to renegotiate the purchase price of the social network firm. The lawsuit aims to make Tesla’s CEO liable for his misconduct.
California law states that members who engage in misconduct related to a proposal cannot vote on the said proposal. That applies to all companies in the state.
The shareholders seek a jury trial, and their complaints are subject to further revisions.
What Analysts Say
Analysts say that what the investors are saying about Elon Musk may be true. It seems like he is trying to buy Twitter for a lower price or walk away from the deal.
If you think about it, it makes sense. By saying that there are so many bots on Twitter, he reduces its value – at least in the eyes of the public. And he has tweeted how concerned he is about it several times. Bots are software programs often linked with misinformation, which is a big issue on social media platforms. Since Twitter banned US ex-President Donald Trump because he was a source of misinformation, it’s even a bigger deal.
Elon Musk himself confirmed he might seek to pay less for the takeover. At a technology conference last May, he said that striking the deal at a lower price was not out of the question.
The claims said Musk is trying to reduce the offer by as much as 25%. If he pulls that off, he will reduce $11 million in the Buyout consideration.
And if he can’t close the deal, his statement about the bots on Twitter could be a viable excuse for backing out.
Now here’s the problem. If Elon Musk does that, it will damage Twitter’s reputation because it will insinuate that there are many bots on the platform. So, it forces Twitter to sell the firm at a lower price. If that happens, all we can say is, “Well played, Elon Musk.” He played his cards right.
But then again, these are just speculations. We don’t know if this would happen or if Musk really carefully planned it. Also, we don’t know which one is telling the truth. Do bots really plague Twitter or not?
Users can only wait for the development of this story.
Should You Be Concerned?
Maybe. Elon Musk wants to make Twitter the real champion of free speech. He has already successfully bought every Twitter Follower on the platform when he bought Twitter, so he is the King Tweet as of 2023! On the other hand, if he successfully grows Twitter, banned people may be allowed back to the platform. That will surely change things up.