Elon Musk Has Triggered a Battle for the Future of Twitter

Elon Musk has offered to buy Twitter for $43 billion, according to a regulatory filing on Thursday. The surprise move has been labeled by some experts as a whim to gain attention, while others think it's a game changer that will end with him taking over the entire company.

The Tesla CEO, who owns 9.2 percent of the social media site and is its biggest shareholder, has offered to buy the remaining percentage of the company for $54.20 per share—a 38 percent premium on the price before his investment in the company was announced on April 5.

In a letter to Bret Taylor, chair of Twitter’s board, Musk said he had invested in Twitter because “I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.” However, Musk wrote, “I now realize the company will neither thrive nor serve this societal imperative in its current form.” His answer to that is to take the company private.

Should his offer, which was presented as final, be rejected, Musk has threatened to reconsider his position as a shareholder. “This is not a threat, it's simply not a good investment without the changes that need to be made,” he said. Musk did not respond to emailed and tweeted requests for comment.

Twitter’s response was swift. Spokesperson Brenden Lee directed WIRED to a statement saying the company would “carefully review the proposal to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders.” Twitter’s share price rose to $48.70 before trading opened on April 14, up more than 6 percent from the day before. The stock opened up, trading at $48.36.

“Ultimately, we believe this soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company,” Dan Ives, a tech analyst at investment firm Wedbush Securities, wrote in a note published after the announcement. “It would be hard for any other bidders/consortium to emerge and the Twitter board will be forced to accept this bid and/or run an active process to sell Twitter.” However, this unsolicited bid—which is not a formal hostile takeover—is not a guarantee that Musk will take over the company. “Anyone could walk away from the offer,” says Timothy Galpin, senior lecturer in strategy and innovation at Oxford Saïd Business School. “It may be that he decided to back out, or the Twitter shareholders don’t approve it. A deal is never done until it’s closed.”

And the deal could be stalled before it even begins. Given the offer and the obvious intentions behind it, Twitter’s board of directors could insert a shareholder rights’ plan, informally called a “poison pill,” that would prevent any individual shareholder from buying more than, say, 10 percent of the company. This would dilute the value of Twitter stock, allowing other shareholders to ramp up their investments at a discount.

Other responses to the takeover attempt have focused on what Musk would do if it goes through. Musk’s direct mention of free speech in the letter accompanying his bid has people worried that if he does take over the platform, he could roll back some of the platform's measures against hate speech.

“I would argue there would be a negative impact on democracies worldwide if someone like Elon Musk owned Twitter,” says Christopher Bouzy, founder of BotSentinel, a service that tracks inauthentic behavior on Twitter. Musk’s absolutist approach to free speech would open the door to people like Donald Trump, who was banned from Twitter in January 2021 for stoking the insurrection on the US Capitol through social media, to return to the site.

“Twitter would become a cesspool of mis- and disinformation with real-world consequences,” Bouzy says.

One reason Musk may want to buy the business—if he’s serious about it—is because it acts as a megaphone for his own views. “He’s a social platform communicator,” says Cary Cooper, a business professor at Manchester Business School. “He’s a business maverick, in all sorts of ways. He’s been fairly successful in his business ventures, and I can understand him wanting a communication platform. It allows him to express his views in a way that fits in with his personality.”

But the big question remains: How likely is it that Musk’s bid will be accepted? While the offer's $54.20 a share is up from the shares’ value before Musk bought in, it’s still down from highs of $77.06 a share in February 2021. It’s also well below the 52-week average the company has been trading at. And intraday trading on April 14, which dropped below the opening price, indicates the market doesn’t believe Musk is likely to pull it off. Musk’s 38 percent premium “is about in the range of what an average premium is being paid for companies,” which tends to lie between 30 and 40 percent above current value, says Galpin. “It’s not a slam dunk to guarantee that enough shareholders would approve an offer at that level,” he says.

While Musk, the company’s largest shareholder, obviously wants the sale to go ahead, other large shareholders, including The Vanguard Group, Morgan Stanley, BlackRock, and State Street Corp, may not. WIRED asked all four firms whether they would accept a Musk takeover. At the time of publication, Morgan Stanley had not responded. Ed Patterson, global head of public relations at State Street Corp, Barbara Williams, director of corporate communications at BlackRock, and Vanguard spokesperson Alyssa Thornton said that they would not comment on specific companies.

Conventional business wisdom would suggest that they’re likely to turn the offer down. “Some shareholders may own the shares for more personal-value-based reasons, rather than financial ones,” says Galpin. “It’s going to be a mixed bag across the shareholder base. Is their consideration a financial game or is their consideration a personal-values-based, societal good decision on their part? Only the individual shareholders would know that.”

The price of the potential buyout is eye-watering, but it would be comparatively small for Musk, whose wealth is estimated at $273 billion. “That’s small change for him,” says Cooper. Anil Dash, CEO of software development startup Glitch, agrees: “He could afford to outbid almost anybody. It really only comes down to his whims.”

Even if the bid fails, and Musk doesn’t get to see how well he could run Twitter alongside Tesla and SpaceX, as the firm’s primary shareholder, he likely still wins for sending the stock price soaring.

However, how that money is held could give an indication of how serious Musk’s bid for Twitter actually is. “He can’t possibly have more than $40 billion lying around in cash to settle this transaction in a serious amount of time,” says Siva Vaidhyanathan, Robertson professor of media studies at the University of Virginia. “His wealth is locked up in Tesla stock and not a small bit of Bitcoin.”

Divesting that into realizable cash would take time—and would also have a negative effect on the company he already runs. “The notion of unloading $40 billion of Tesla stock would create a value shock for Tesla,” says Vaidhyanathan. “He can’t seriously expect to take over one company by inflating its value while simultaneously deflating the company he actually runs.”

That much is admitted in the announcement filed with the Securities and Exchange Commission (SEC) announcing Musk’s intention to take over. The proposal to buy the outstanding shares in the company is non-binding and, among other things, conditioned on “completion of anticipated financing.”

In short: Musk doesn’t yet have the cash in hand to buy Twitter. “I don’t think Elon Musk is a serious person,” says Vaidhyanathan. He believes Musk lacks the appetite to handle the regulatory requirements of a major social network that acts as a public forum, an obligation that would fall on him as sole owner.

“There’s no way he wants the responsibility for dealing with regulators in London, Brussels, New Delhi, and Canberra—let alone the United States,” Vaidhyanathan says. “It’s not a well-run company. It’s not a profitable company. It’s full of hazards ahead. He must know it would not be fun to run Twitter.”

Elon Musk Has Triggered a Battle for the Future of Twitter

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