Kuwaiti newspaper newspaper | Acquiring Twitter … an investment in influence

• Musk aims to market “Tesla” and “SpaceX” and promote its sharp speculation in cryptocurrency
• It faces problems, especially the “poison pill” and the restrictions of regulatory and supervisory authorities

The takeover bid by billionaire Elon Musk, owner of electric car company Tesla and SpaceX, the maker of aerospace flights, has opened the door to unknown speculation in the business world about the purpose of the takeover, which takes the form of a description hostile, as well as the role of corporate shareholders in preserving their identity, not to mention how the world’s regulators handle emerging situations; It can affect the neutrality of social networks as well as exploit the data of their users.

Although Elon Musk’s offer, made last Thursday, to acquire all the shares in Twitter, which he originally owns 9.2% of his shares, amounts to about $ 43 billion at a price of $ 54.2 per share, which represents an increase of about 38% from the closing price at the beginning of this month. However, it is also less than the highest price levels that Twitter’s share has reached in a year, reaching $ 70 per share, or less than $ 15.8, or 22.5 percent … However, the difficulty of acquiring Twitter does not stop at just objecting to the share price.

Unfulfilled promises

Musk, who announced that the purpose of acquiring Twitter was to turn it from a joint-stock company into a private equity firm, remembered many of his promises he did not implement, such as his tweet on Twitter in August 2018 on obtaining secure financing to turn Tesla into a company. Especially what did not happen later, which forced the Securities and Exchange Commission to file a lawsuit against him and fined him $ 20 million, which led to a settlement that required him to obtain prior regulatory approval from the government. to obtain for any tweet that will affect the share price, not to mention his unknown tweets. Which caused a stir in the cryptocurrency markets by betting on underwater currencies that only multiplied in value hundreds of times. Because of what he called “concerns about the intensive electricity consumed by the mining process used to extract the currency and its impact on climate change.”

Why “Twitter”?

Perhaps the most important question in the acquisition process is: Why does Elon Musk especially want Twitter, which is not very attractive in terms of profits and revenue compared to the price offered for the acquisition?

Twitter’s quarterly revenue for the fourth quarter of last year was less than the expectations of “Wall Street” investors, as it reached $ 1.57 billion, with a 13% growth in subscribers, to reach 217 million subscribers, indicating that the development plan implemented by the Twitter administration in The development of revenue and attracting subscribers has not yet borne fruit on the social networking site, to the extent that there is a tendency for the platform to subscribe to Twitter to make or perhaps some of its financially paid services to cover the decline in basic advertising revenue within its projects to diversify sources of revenue.

Consequently, the acquisition of “Twitter” is not to bring about a direct financial benefit in the ability to obtain investment and strategic benefits, especially for the controversial personality of Elon Musk, especially since he is the owner and founder of two companies of the so-called companies of the future, namely “Tesla” for electric cars and “SpaceX” for the manufacture of aviation. And spaceflight, not to mention its sharp speculation in the cryptocurrency world, is an investment aimed at gaining “influence” and perhaps targeting the platform with limited profits to bring its ideas and companies to some 218 to market millions of users on the platform that takes a news character or “more seriously” for entrepreneurs such as “Instagram” or “Snapchat”, … As for Musk’s statement that the goal of the acquisition is “more democracy” in ” Twitter “, it can be an access point for more controversial tweets and trends than its predecessors.

difficulties

However, the issue of acquiring Twitter is not as easy as some expect. ) at the time of the command of the Twitter board of directors.A defensive measure that makes the task of what is known as coercion or hostile acquisition impossible, by what is known as the “poison pill” plan “Twitter” has been implemented and its idea is to ban one owner from buying more than 15 per cent of the company’s shares by activating a 364-day plan that gives shareholders the benefit of buying additional shares that ‘ a reduced price has been issued, in a way that makes it impossible for any investor, including the holder of forced or hostile acquisition on Twitter.

The “poison pill” strategy embodies a direct rejection of a particular owner even if it harms the company by issuing additional shares, the purpose of which may be temporary or require new investments to meet the growing size of the company to comply.

The problems of Musk’s acquisition of Twitter extend to the regulatory and supervisory authorities, particularly the U.S. Security and Exchange Commission, which stressed Musk’s need to obtain permission from him before making tweets and statements about the acquisition of Twitter, so the incident of “insured financing” of the company is repeated. Tesla, “not to mention the discussion of the idea of ​​one person controlling the direction of public opinion in a platform with an active role among social networking sites, especially after a statement about the impact of” Twitter ”In determining public opinion trends during the Corona pandemic, the recent US elections and the Russo-Ukrainian war.

Understand the effect

No matter where Musk’s acquisition of Twitter will reach, the most likely analyzes suggest that his fate will be rejection, either from shareholders or from regulatory agencies. in the formation. public opinion trends, especially in the midst of a world that is changing rapidly, making a virtual platform a role that transcends all that governments and big companies spend on media and marketing.

Mohammed Al-Baghli

Leave a Comment