The Twitter investors Elon Musk hopes to keep may not want to stay

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Musk, since the initial proposal, made his first public comments about the big deal expressing doubt if the bid will ultimately go through.
Musk, since the initial proposal, made his first public comments about the big deal expressing doubt if the bid will ultimately go through.
Frederic J. Brown / AFP
  • Elon Musk says he wants to retain as many of Twitter's shareholders as possible if he's successful in his bid to take the social-media network private.
  • There are a lot of people who could take Musk up on his offer - either to buy their shares for $54.20 apiece in all cash, or to roll over their stakes into a newly private Twitter.
  • Some of them are already weighing in on the potential deal, and using Musk's own preferred form of communication to do so. 

Elon Musk said Thursday - and later backed it up with a tweet - that he wants to retain as many of Twitter's shareholders as possible if he's successful in his bid to take the social-media network private.

First, he might have to persuade them to accept his offer. 

"I should also say the intent is to retain as many shareholders as is allowed by the law in a private company, which I think is around 2 000 or so," Musk said at a TED event in Vancouver. "We'll try to bring along as many shareholders as we're allowed to."

As Musk alluded to, US regulators place limits on how many shareholders a private company can have before it's required to release the same sort of financial information that public companies have to make available. While Musk was right that the baseline number is 2 000, it drops to 500 if the shareholders don't count as accredited investors, or high-net-worth holders that would allow the company to avoid some reporting requirements. 

With a shareholder roster that includes everyone from its own founder to the biggest institutional investors and an army of retail investors, there are a lot of people who could take Musk up on his offer - either to buy their shares for $54.20 apiece in all cash, or to roll over their stakes into a newly private Twitter. 

Some of them are already weighing in on the potential deal, and using Musk's own preferred form of communication to do so. 

Ross Gerber is co-founder and president at Gerber Kawasaki Wealth and Investment Management, which owns more than 9 000 shares in the company, according to the company's latest filings with the SEC.

Potential

He tweeted Thursday: "I think any way this shakes out for Elon. It proves that twitter has lots of potential upside in improving their business. No doubt management change is necessary. But Elon should have created a vehicle for public shareholders too. The cash offer is way low....Elon will have to come up with $69 a share cash and he wins twitter."

"Lots to unpack here," Gerber said in a message to Bloomberg News. "Shake-up is well needed. Offer is low and no shareholders will take it. Elon is being opportunistic as Twitter management is weak."

The potential take-private deal would value the company at roughly $43 billion. Twitter shares closed Thursday at $45.08, giving the company a market value of $36 billion.

Saudi Prince Alwaleed bin Talal, chair of the board at Kingdom Holding Company, was one of Twitter's largest investors to weigh in. He rejected the low-ball bid in a tweet: "I don't believe that the proposed offer by @elonmusk ($54.20) comes close to the intrinsic value of @Twitter given its growth prospects....Being one of the largest & long-term shareholders of Twitter...I reject this offer."

Jonathan Boyar, managing director at Boyar Value Group, which owns more than 38 000 shares in the social-media platform with a rough valuation of $1.75 million, said that everything Musk does is unconventional. 

"We have no idea what his true intentions for Twitter really are," Boyar said in an interview. "Regardless, his interest in the company reinforces our view on the value of the platform and user base, and how it has been mismanaged for years. 

"With no controlling shareholder and major activist investors as shareholders, if the company does not execute, Twitter's days as an independent company are probably numbered," he added.

Even away from actual investors (or at least publicly known ones), the bid was a hot topic of conversation. The term "Twitter stock" was the number one searched phrase, according to Google trends data.

Tweets about the prospective takeover from NFL Super Bowl champion Tom Brady to billionaire Mark Cuban were among those that caught fire. 

Dallas Mavericks owner Cuban noted the bid for the social platform has essentially opened the flood gates for all of the tech giants. 

Cuban said he thinks big technology companies from Google to Facebook are checking with their antitrust lawyers to see what the likelihood of regulatory approval would look like. And in the event Twitter rejects the $54.20 proposal and Musk sells his shares, Cuban said at least one of the tech giants would have a clear path to a successful acquisition. 

Musk, in the time since the initial proposal, made his first public comments Thursday about the big deal expressing doubt if the bid will ultimately go through.

"I am not sure that I will actually be able to acquire it," the billionaire entrepreneur said at a TED event in Vancouver. The offer is intended to create "an inclusive arena for free speech", not as a way to make money, he said.


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