If the Twitter board initially thought that Elon Musk’s offer to buy the social media company for $ 43 billion was just a stunt, now he is in a defensive position on several fronts.
After the world’s richest man revealed on Thursday how he intends to fund his takeover bid, Twitter executives are under pressure to sit down at the negotiating table with him or find alternatives as a candidate for the “white knight” to help them. came to the rescue as the company approached the point where they were.
For some, Musk’s candidacy has raised hopes that Twitter will be private to deal with his alleged failure to innovate and find new revenue streams, even if many do not see Musk as the man of the job. He also shed light on the checkered history of Twitter’s slow innovation, technical flaws and struggle for leadership.
“Twitter has been developed to its full potential,” said a former board member. “God, yes, it has to be private. There is a world where I can imagine that the business is 10 to 100 times bigger. ”
The board is “caught between the lack of value in Musk’s offer, but perhaps the lack of ability to realize more value on their own,” said a tech investor who has no Twitter position.
Twitter grew with a far slower video than its social media counterparts, including Facebook and LinkedIn, and was less profitable. In 2020, he caught the attention of an activist investor, Elliott Management, for fears that its founder and then CEO Jack Dorsey was too free and indecisive.
Analysts and advertisers criticize Dorsey for being a purist on Twitter, too focused on small changes to the core product, while failing to aggressively look for ways to increase ad delivery and diversify revenue outside of advertising in areas such as subscriptions.
“Here is a company that has such great potential and continues to squander it. You have almost an entire doctoral dissertation on missed opportunities, “said one CEO of an advertising agency, adding that Twitter has failed to take advantage of areas such as short video, ratings and reviews and news.
The technology-focused buy-out company, Toma Bravo, also believes the platform has been under-managed and has untapped growth potential, according to a source familiar with their thinking.
The company, which has assets of more than $ 100 billion, has begun talking to Musk about its involvement in the takeover effort, the source said, which could help the offer gain momentum by attracting additional debt and own funding from institutional investors. according to many well-known creditors. Toma Bravo declined to comment.
Musk’s approach comes at a time of particular vulnerability for Twitter, which only recently attracted a new CEO, Parag Agraval, a longtime engineer at the company who is well-respected internally but relatively unknown to Wall Street.
As a sign of tension behind closed doors, Dorsey, who will remain on Twitter until next month, said on Twitter this week that the board “has always been a dysfunction of the company”, without giving further details.
The Twitter board, which has been criticized for barely using the product or holding many shares in the company, is chaired by Brett Taylor, CEO of Salesforce. It also includes Egon Durban of Silver Lake, who joined after the company invested $ 1 billion two years ago – and whom Musk had previously hired for his failed bid to take Tesla privately.
Dorsey “may be a weak spot that causes potential shocks or radical changes to the board,” said Stefano Bonini, a corporate governance expert at the Stevens Institute of Technology.
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Shareholders may be urging the board to accept the deal, according to Anne Lipton, an associate professor of business law and entrepreneurship at Tulane University. But “it’s not obvious that shareholders are trying to pressure the board to make this happen.”
If social media company directors are serious about keeping Musk out of the way, B’s other credible plan is to find a “white knight” who could offer an alternative to the $ 54.20 a share offered by the entrepreneur, which he has already said. that it will be his “best and last offer”.
Twitter is not short of potential buyers, but many are withdrawing from the company for now. In the past, large technology groups such as Salesforce and Google have expressed interest in taking over. Neither of them is currently interested in a Twitter approach, according to people close to the two executives.
Other major technology companies such as Amazon, Facebook, Microsoft and Apple may be interested in buying Twitter, as they could all integrate the social media company into their existing business. However, the probability of any of them getting approval for the deal is close to zero given the intensified antitrust monitoring of Big Tech in Washington.
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Interest among private equity buyers in participating in the Musk-led takeover remains lukewarm as a number of established potential buyers, including Blackstone, Brookfield and Vista, have chosen to stay away.
The Twitter board has not yet given Musk an official response to his proposal, but has taken a poison pill to slow his progress. But now that Musk has the funding, the board will need to figure out what it wants to do quickly.
Musk “requires a very dedicated board” to overcome Musk’s progress, Bonini said. “There is a possibility of shaking the board, with some members leaving, some members changing their minds and some turbulence.
Additional reports from Tim Bradshaw in London and Richard Waters in San Francisco
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