Elon Musk has a few obstacles to overcome before his $ 44 billion Twitter (TWTR) request is over. And the cost of finding a social media platform can increase as shareholders gain weight.
Why Elon Musk Just Bought Twitter
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On Monday, Elon Musk bought Twitter for $ 44 billion. Musk, C.E.O. of Tesla, the world's richest man, plans to take over a private communications company, and says he wants Twitter to be more...
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Tesla stock fell 11% on Tuesday as investors scrambled with Elon Musk for Twitter acquisition and increased EV competition. Musk uses most of his Tesla stake as collateral to finance the $ 44 billion acquisition on social media. Meanwhile, Ford said it was facing a strong demand for its F-150 and that it plans to produce 150,000 units by 2023. Tesla&#...
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Twitter has announced that it welcomes Elon Musk's $ 44 billion promise to buy on Monday. Jeff Bezos took to Twitter to ask if Tesla's business dealings in China would empower the company. Twitter has been banned in China since June 2009 as part of the country's "Great Firewa...
On Monday, the Twitter board unanimously approved a Tesla CEO (TSLA) proposal to buy a social media company for $ 54.20 a share to keep it private, following an earlier attempt to prevent Musk's brutal capture.
Proponents of her case have been working to make the actual transcript of this statement available online. Shareholders and regulators, they say, could back off against the proposal. Stockbrokers, at large enough prices, can press to get a higher share price, or reject Musk's offer. U.S. regulators they may also need to be transparent and objectionable if they experience concerns about antitrust.
The by-laws of Twitter require the company to give shareholders notice at least 10 days before the voting agreement, which is expected to close in 2022.
John Livingstone, a researcher , said the shareholders' approval was a major obstacle for Musk and noted that a board vote was simply a recommendation.
Musk received a total of 9.2% on Twitter earlier this month, initially planning to become an inactive investor and agreeing to join the board. He reversed both decisions before stating in his April 13 file that he intended to buy Twitter. In a letter and message on Twitter board, he promised to buy Twitter for $ 54.20 a. share - 54% premium on the last day of trading before the start of receiving shares.
Because Musk does not have a governing body, he needs a majority of shareholders to vote for him, according to Livingstone.
"The board cannot do this without the consent of the shareholders," Livingstone said. "Shareholders can take it or leave it."
University of Chicago Law School professor said a "no" vote for shareholders on Twitter was the only thing he expected to break the agreement, although that seemed unlikely.
On the other hand, he points to the price of Twitter, trading in broader arbitrage, at about $ 49 on Tuesday, as an indication that there are market uncertainties about the ongoing deal.
"The market must consider the risk of non-compliance," Henderson said, noting Musk's history of making unproven public statements. "It is unlikely that this is the law."
Twitter has agreed to submit the first representative statement as soon as possible, and to hold a special shareholders' vote.
University of Pennsylvania Law School Jill Fisch says the representative's statement is important in persuading Twitter shareholders to vote yes because it will provide more information than they currently have.
"So that's very important that the disclosure is complete and accurate," Fisch said.
This document will include details such as how Musk intends to fund the acquisition, what background events led to the offer, and what will happen to the shares held by Twitter staff and managers.
The SEC will 'carefully consider' a Twitter representative statement
Before shareholders can find a representative, the Securities and Exchange Commission must approve it.
"The SEC will carefully consider the representative's statement," Fisch said.
The agency will seek to ensure that Musk's public statements about the application are complete, accurate, and total, compliant with safety rules, he said.
Even with the approval of the SEC representative, some sticky points may break or delay the agreement. In sufficient quantity, shareholders can sue the Chancery court in Delaware, where the Twitter headquarters is located, in order to claim a higher share of the shares from Musk. Livingston said the court would consider the move if 10% or more of Twitter shareholders argued.
And some regulators, including the U.S. The Federal Trade Commission, the Federal Communications Commission, and the Department of Justice can ask Musk to address dishonesty and other concerns.
According to Livingstone, opposition shareholders may have a contentious argument that Musk's offer is too low, considering that Twitter, at the peak of February 2021, traded north at $ 77 per share.
The dispute is difficult to overcome, he said, as Delaware courts tend to withdraw boards. However, concerned shareholders may dissolve the board, and a decision in their favor may cost the millionaire more than it is currently required to pay.
Legal experts say the agreement should also satisfy unscrupulous regulators, although traditional competition concerns are less likely to stand out from Musk's other major businesses - Tesla, SpaceX, Starlink, Boring Company, and Neuralink - do not include social media.
However, Fisch says Biden's general concern for corporate power is exacerbated by Musk's ability to control Twitter, so it could attract special attention.
"One might think ... an antitrust review could be complicated, or even time-consuming, by putting mergers into further tests," Fisch said.
An independent group representing the Open Markets Institute disagreed in a statement released Tuesday, saying Musk's interest in ownership of the Starlink satellite communications program was a cause for concern.
“Mr. Musk already controls one of the world's most important online forums, ”the group told Starlink. "This means that since we can now expect the US government to block the takeover of Twitter by Google, Facebook, Comcast, or Verizon, the same rules apply to Starlink owners."
In a regulatory letter filed on April 20, Musk announced that he would end the Twitter acquisition with X Holdings, a company he owns and launched earlier this month.
Twitter shares closed Tuesday at $ 49.68 per share, down 3.01% since closing Monday. Meanwhile, Tesla shares continued to decline on Tuesday, closing at $ 876.42 - down 12.2% from the close of the previous day.
