Elon Musk, Twitter’s largest individual shareholder and undoubtedly one of its most popular users, would not join the company’s board, opening up the possibility of a hostile takeover battle, analysts say. Elon Musk has reserved the right to raise his stake in the company from the current 9.2 per cent, according to an amended US Securities and Exchange filing made on Monday.
The amended filing no longer mentions that Elon Musk can limit his stake to 14.9 percent in the company and replaced it by a note indicating that the Reporting Person (Musk) “might” take additional stake, according to a Forbes report. “The Reporting Person may, from time to time, acquire additional shares of Common Stock and/or retain and/or sell all or a portion of the shares of Common Stock held by the Reporting Person in the open market or in privately negotiated transactions, and/or may distribute the Common Stock held by the Reporting Person to other entities,” the filing said.
The billionaire and chief executive of Tesla has no “present plans or intentions” to acquire additional shares, but “reserves the right to change his plans at any time” based on “relative attractiveness of alternative business and investment opportunities,” the filing said.
Twitter’s Cinderella story turns into Elon Musk’s Game of Thrones
“This now goes from a Cinderella story with Musk joining the Twitter board to likely a Game of Thrones battle between Musk and Twitter,” Dan Ives, a Wedbush Securities analyst, told Forbes.
On the day Musk told Twitter that he would not join the company’s board, he had suggested many changes that Twitter needs to make for instance to Twitter Blue, such as making the service ad-free and with the option for users to self-verify themselves. He however deleted some of those tweets on Monday. Analysts expect Musk to continue with these criticisms and suggestions going ahead since he would not be taking up an active role as a member of the company’s board.
According to the Bloomberg Billionaires Index, Musk’s wealth is worth $249 billion, making him the richest person on the planet. This compares with Twitter’s valuation of $37 billion.
The renegade retreats, perhaps for the best
″[T]his weekend’s change-up spares the company from having to deal with a renegade director tweeting about board-level discussions. That would have been untenable,” Gordon Haskett Research Advisors’ Don Bilson wrote in a note Monday, according to a CNBC report. “The flip side to this is TWTR must deal with a wild-card investor that already owns 9% of the company and has the resources to buy the remaining 91%. As volatile as Musk is, we could see a move like that made shortly. Or we could never see it all. This overhang that TWTR now lives beneath certainly qualifies as a distraction,” Bilson added.
While making the announcement about Elon Musk deciding against joining the board, Twitter CEO Parag Agrawal said in a note to Twitter employees that the decision is probably for the best. He however added that “Elon is our biggest shareholder and we will remain open to his input.” He also warned Twitter employees that there will be distractions ahead and they must tune out the noise.
Twitter’s employees are stressed out over what could possibly happen after Musk backed out from joining the board, as this could mean he would have free hand in critiquing Twitter features, according to a Bloomberg News report. “This decision by Elon does not bode well for Twitter,” because he could increase his stake while posting increasingly antagonistic things about the platform, Matt Navarra, a social media consultant, told Bloomberg. “Twitter thought having Trump on the platform was tough. Elon Musk is going to be a corporate nightmare,” he added.
