Elon Musk just offered to buy Twitter for $43 billion. That offer gives the middle finger to Twitter’s Board and management. Expect a reply in kind. How should we respond?
“Иди На Хуй” — The New Battle Cry Of Freedom
At the outset of Russia’s recent all-out attack on Ukraine, a Russian naval vessel demanded the surrender of the Ukrainian garrison on Snake Island in the Black Sea.
The garrison commander told the vessel’s captain, “Иди На Хуй” (“Go f*ck yourself”).
This reply has become Ukraine’s battle cry in its war against Russia.
Musk has taken up this cry in his own war against Twitter’s Board and management.
Musk and Twitter: From “Special Operation” To Open Warfare
Musk quietly built a 9.2% stake in Twitter. This holding made him the company’s largest shareholder.
In response to Musk’s subsequent disclosure of his stake, Twitter offered him a friendly seat on its Board. With the offer, though, came conditions: Musk could not increase his holdings above 14.9%, nor take over the company.
Management thought it had a done deal, announcing Musk’s accession, subject only to a background check and Musk’s formal acceptance.
Musk then publicly snubbed the offer. A few days later, he bid for the entire company. His tender price represents a 38% premium over Twitter’s stock price when he started accumulating shares.
Musk’s buyout bid also effectively tells Twitter’s Board and management, “Иди На Хуй.”
Twitter’s Board and management are reportedly considering a poison-pill defense to block any hostile takeover.
Doubting either Musk’s seriousness or his prospects, the market cooled, with Twitter’s share pricing closing down on the day, 20% below the tender price.
Thought unique in many ways, Musk finds himself in company when it comes to reaching for a major media outlet.
Salesforce’s Marc Benioff bought Newsweek. Amazon’s Jeff Bezos bought The Washington Post. Steve Jobs’s widow, through a social-justice organization she founded, bought The Atlantic.
At one point in time, Mexican communications billionaire Carlos Slim and his family owned 14.6% of The New York Times, though the company’s dual-class structure screened his level of influence.*
In all cases, these billionaires pledged to place public good over profits.
If the best way to rob a bank is to own it, maybe the best way to spin coverage is to buy a media outlet.
Whose Company Is It, Anyway?
To Musk’s credit, with Twitter, he has gone about things the direct way: he wants to buy 100% of the shares. If he owns the whole company, he may do with it as he pleases.
Not so for Twitter’s Board and management. Twitter is a standard, publicly traded Delaware corporation. The company is not set up as a public-benefit corporation, which may pursue the dual purposes of shareholder-wealth maximization and the public benefit identified in the company’s charter.
Consequently, Twitter’s Directors and officers have a fiduciary duty to manage Twitter for the benefit of the company’s shareholders as a class (including Musk). The Board and management may take into account the interests of stakeholders (such as Twitter users, employees, etc.) but only to the extent doing so ultimately and primarily benefits Twitter’s shareholders.
If Twitter’s leaders do otherwise, they will have turned Twitter into their own plaything. But, unlike Musk, they will not be dipping into their own pockets for the privilege; they will be dipping into the pockets of Twitter’s shareholders.
That will be unlawful. It will also be unethical.
Trolling By Polling
A fight over fiduciary duties represents only one front in the war between Musk and incumbent Twitter leadership. They also battle for hearts and minds.
Here, Musk has done something uncharacteristic for a billionaire shopping for an media outlet: he has publicly polled the outlet’s customers.
In particular, using his own Twitter account, Musk asked his followers and other fellow Twitter users whether Twitter rigorously adheres to the principle, “Free speech is essential to a functioning democracy.”
More than 70% of over 2 million respondents said, “No.”
Another Musk poll asked whether Twitter should add an edit feature. (73% of 4.4 million votes agreed.)
Method To The Madness
Of course, to some degree, Musks uses these polls simply to troll Twitter management. For example, Musk also asked whether Twitter should turn its largely unused San Francisco headquarters into a homeless shelter (with over 90% of 1.4 million respondents saying, “Yes”).
More seriously, Musk’s polling seeks pre-emptively to undercut Board and management claims that they are running Twitter in the best interests of anyone other than themselves. Musk has offered shareholders a sizable premium for their shares. His polls purport to show that Twitter’s leadership poorly serves not only its user base but society in general.
As Twitter marshalls its lawyers, accountants, and investment bankers like so many clattering, smoke-spewing Russian armored vehicles, one can’t help but picture Musk popping out from behind a tree with a Javelin or NLAW missile.
Musk thrives on surprise. He is predictably unpredictable.
So, it’s hard to guess his next move, let alone his end game.
Musk’s current war against Twitter might simply be posturing for greenmail. Maybe Twitter’s leadership will pay him a premium to go away. Or, if Twitter finds a white-knight acquirer, Musk will make a few billion dollars off of his Twitter stake. He might well use the money to found a competing platform.
But as the world’s richest man by far, what need has Musk for a few extra billion dollars? So, maybe he’s just bored. Based on his track record, trolling and disrupting entire industries keep him happy and engaged.
Or maybe Musk means what he says. Maybe he wants to promote robust public debate and free speech and is willing to shell out $43 billion to make it happen.
We know what Musk’s and Twitter leadership’s messages are to each other.
What should our messages be to each of them?