Elon Musk’s Twitter bids are high. That doesn’t mean the company has to accept it, according to experts.

On Thursday, Tesla CEO of billionaire Elon Musk announced he made an offer to buy Twitter for $43 billion.

Musk made his move not long after Twitter announced that it has no agreement was reached with him about joining its board. That, in turn, comes after Musk revealed that he was bought more than 9% of Twitter, making him its largest individual shareholder.

Musk isn’t shy about his motives for wanting to buy Twitter. He said he believes it should be less restrictive on censorship of speech.

But his willingness to do the deal is now beset with questions about its ability to actually get it done — and Twitter’s willingness to accept it.

How will Musk fund the deal?

The first question is whether Musk can get the deal done.

Now, according to Bloomberg, Musk has about $3 billion in cash available. So he’ll have to finance the rest of the deal differently, whether that’s selling Tesla shares or taking out a loan.

Musk owns about 173 million Tesla shares. However, securities filings show 88 million of that is being used to pay off personal loans. However, he still had the option to buy an additional 60 million shares, the filing showed.

In a live interview On Thursday in Vancouver for the TED2022 conference, Musk said “I have enough assets” when he was asked if funding had been secured for a potential purchase.

In 2018, as CEO of Tesla, Musk declare he is considering starting a private electric car company and that he has secured funding — a requirement the US Securities and Exchange Commission fined Musk and Tesla after an investigation.

Kevin Kaiser, an adjunct professor of finance, is senior director of the Harris Family Alternative Investment Program at the Wharton School of the University of Pennsylvania.

Twitter “would have to make a review of the currency offered if it wasn’t cash,” Kaiser said.

Can Twitter’s board reject bids?

Twitter’s board has no fiduciary obligation to accept Musk’s bid, despite the generous offer, if it thinks it’s not in the best interest of the company, Kaiser said.

Thank you so-called business judgment rulesA US company’s board of directors has broad scope to determine how it evaluates its ultimate fiduciary duty, he said.

So while some shareholders are likely to sue Twitter if the board rejects Musk’s offer, the lawsuits probably won’t go far, Kaiser said.

“In this case, there isn’t another contractor,” Kaiser said, “so the board has to discuss whether the company is in the best interest of the company — and is privately owned by Musk. is a really tough analysis, but it’s very likely they could use the business judgment rule to say it’s not in their favor if it’s private and Musk’s private.”

Representatives for Twitter forwarded requests for comment to declare Thursday morning said it was reviewing Musk’s bid.

Kaiser said he would be “appalled” if the government tried to interfere in the transaction given that a private investor was seeking to bid on a publicly traded company. At the same time, Twitter is a unique company that many consider “socially important” – including Musk himself, Kaiser said.

Representatives for the Department of Justice did not immediately respond to email requests for comment.

In a securities filing on ThursdayMusk said the proposal was his “best and last offer” while reiterating his disagreement with Twitter leadership over the direction of the company.

“It’s a premium price, and your shareholders will love it,” Musk said in the filing. “If the deal doesn’t work out, because I don’t trust the leadership nor do I believe I can drive the change needed in the mass market, I will need to rethink my position with as a shareholder.”

At least one major shareholder has stated his objection. In a tweet on Thursday, Saudi Prince Al-Waleed bin Talal, who according to Bloomberg owns 4.4% of Twitter, said he doesn’t believe Musk’s offer is “closer to the intrinsic value” of the company.

Twitter shares ended Thursday’s trading session down 1.7 percent to $45.08.

What could Twitter misinformation and harassment mean?

As Musk dramatically increased his engagement with Twitter last week, observers and reported Twitter’s employees wondered if he could completely change the way the platform is moderated.

In recent years, Twitter has taken a more aggressive approach with its rules on harassment, misinformation, and other content it deems inappropriate for the platform. Twitter Bans President Donald Trump while he was still in office after it was said he encouraged riots on January 6, 2021 at the US Capitol. Many parties have criticized the regulatory efforts, including Musk, who has called himself a “liberalist”.

On March 26, 12 days after buying his Twitter stock, Musk tweeted: “Given that Twitter serves as a de facto public town square, failure to adhere to free speech principles essentially undermines democracy. What should be done?” In tweet laterhe suggests he’s interested in getting started on shaping the company’s direction and features on the platform.

When asked why he wanted to buy Twitter at the TED event, Musk replied, “I think it’s very important to have a comprehensive arena for free speech.”

Musk made many suggestions in his TED interview about how he would change Twitter, saying he wanted to make its algorithms available to the public so that certain content could be seen. how it is handled.

He has also repeatedly suggested that he believes most speeches that fall within the bounds of the law should be allowed to appear on the platform.

“If in doubt, let the speech, let it live. If it’s a gray area, I’d say let the tweet live,” he said. “It’s really important that people have both the fact and the perception that they can speak freely within the bounds of the law.”

Twitter critics have expressed excitement about the possibility that the platform could become less restrictive. Representative Lauren Boebert, R-Colo., tweeted April 4: “Now that @ElonMusk is Twitter’s largest shareholder, it’s time to lift political censorship. OH… and BRING TRUMP! ”

Social media analyst Matt Navarra, who has worked with Google, the BBC and the United Nations, said it may be too early to speculate on the details of changes Musk will bring, but he said that unrestricted and uncensored free speech on social media would be an unattractive prospect for many.

Referring to the foundation Trump founded last year, Navarra said: “We know from examples like Truth Social that creating a platform geared towards ‘free speech’ and freedom or no censorship is not. should be a compelling proposition for most people, and neither are they too exciting or a good opportunity for advertisers.

“No one wants to spend hours in an app full of vile people and controversial, controversial and polarizing. That’s not fun and advertisers certainly aren’t going to stick with that for too long. “

at Blogtuan.info – Source: nbcnews.com – Read the original article here