Clarification: What subsequent now that Twitter has agreed to supply Musk?


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Twitter’s approval of Elon Musk’s $ 44 billion takeover bid brings billionaire Tesla’s CEO one step nearer to proudly owning the social media platform.

The deal is anticipated to shut someday this yr. However earlier than that, shareholders nonetheless want to think about, as do regulators within the U.S. and the international locations the place Twitter does enterprise, earlier than finishing the deal.

The provide was accepted, what now?

The method is off to begin for Musk, on condition that Twitter’s board of administrators unanimously authorised his provide and recommends shareholders do the identical.

With the announcement of the deal on Monday, Twitter famous that the provide, which represents a 38% premium to the corporate’s closing value on April 1, is a “important money premium” and can be “one of the simplest ways ahead for Twitter shareholders”.

When Twitter’s board adopted an anti-takeover order often known as the “poison tablet” simply 10 days in the past, the transfer was seen as a transparent signal that administrators have been making ready to reject Musk’s opening provide or maybe search for one other suitor prepared to pay extra.

However the battlefield modified dramatically final weekend when Musk revealed that he had put up $ 46.5 billion – together with $ 21 billion of his private capital – to pay for the acquisition. Musk stated different traders might contribute to the financing.

The locked-in funding not solely underscored Musk’s severe pursuit, but additionally appears to have opened the door to different main Twitter shareholders occupied with listening to extra about his plans for the San Francisco firm.

The small print of these talks are unknown, however Musk might level to constructing a greater than 20-year historical past and operating a variety of companies – most notably Tesla’s veteran CEO. The electrical automotive maker is presently valued at $ 1 trillion – about 25 occasions greater than Twitter.

“I believe there may be nothing higher for Twitter than Elon Musk shopping for it and ideally changing the board, and likewise doubling investments in new revenue-generating merchandise and assets,” stated John Mayer, a know-how entrepreneur and investor. “Musk has the file that he can do the inconceivable.”

It is going to be simple to see why different Twitter shareholders may welcome a jolt in addition to a chance to redeem their funding. Earlier than Musk revealed a 9% stake in Twitter earlier this month, the inventory traded beneath $ 40 – not way more than the $ 26 value when Twitter went public in November 2013. Since then, the technology-driven NASDAQ has greater than tripled, even after Twitter has been lagging behind as the corporate has struggled to constantly publish income whereas producing revenue-less progress in comparison with the 2 dominant forces in digital promoting, Google and Fb.

In the meantime, Tesla shares are actually value almost 300 occasions greater than once they have been issued in 2010. And after struggling to generate income for greater than a decade, the automaker is now extraordinarily worthwhile with a web revenue of $ 3.3 billion in the course of the first three months of it. A yr alone.

What occurs subsequent?

As is customary as soon as an organization agrees to be acquired, the purchaser will get a detailed take a look at the library to ensure there aren’t any crimson flags that haven’t gone up by means of the corporate’s public submitting of information.

This step within the course of is unlikely to trigger any obstacles for the deal, stated Angelo Zeno, a know-how analyst at CFRA.

“He’s buying this firm, not from a monetary perspective,” Zeno stated. “He’ll do with it what he desires and he’ll in all probability look to make important adjustments to the corporate’s enterprise mannequin.”

What might they are saying to regulators?

Final yr, Twitter generated income of $ 5 billion, with $ 2.8 billion from the U.S. and the remaining earned abroad, Zeno stated.

The principle points that companies often give attention to are how promoting an organization can have an effect on competitors within the business, or whether or not it violates antitrust legal guidelines.

These critiques can final months or extra, however are often extra of a possible hurdle when two corporations in the identical business join, or within the case of a single purchaser, whether or not the possession already has a big stake in corporations in the identical business.

Neither Tesla, nor Musk’s different firm, House Exploration Applied sciences or SpaceX, are social media platforms, so antitrust issues are unlikely to come up when regulators evaluate the deal, analysts stated.

“We don’t count on main regulatory hurdles to make the deal as a result of this cleaning soap opera is now ending with Musk’s proprietor on Twitter,” Woodbush analyst Daniel Ives wrote in a analysis notice on Monday.

When can shareholders vote?

The deal is anticipated to shut in 2022, topic to Twitter shareholders’ approval. Twitter didn’t announce the timing of the shareholders’ vote, although the corporate’s annual normal assembly is about for Might 25, which can provide a handy time to survey shareholders.

An organization can select to carry a shareholders’ vote at any time, even earlier than the regulators have completed inspecting a takeover bid.

What about Twitter management?

At this early stage, it’s unclear what is going to occur to Twitter’s present board of administrators or administration group if the deal is accomplished, however Musk has made it clear that he believes the corporate has been mismanaged. This evaluation is a powerful indication that Musk’s upheaval can even embrace a purge of Twitter’s senior ranks.

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