Giant Corporation steps in to block Elon Musk’s hostile takeover of Twitter

One of Twitter’s largest corporate shareholders, Vanguard Inc., has increased its stake in the big tech giant to leapfrog past Elon Musk, who is the largest single shareholder.

“Elon Musk is no longer the largest shareholder in Twitter, it emerged Thursday after wealth manager Vanguard Group increased its stake to overtake him,” the Daily Mail reported. “Vanguard now owns 10.3 percent of Twitter, while Musk owns 9.1 percent of the company, making him the largest single shareholder.”

Musk’s stake is still four times that of the company’s only other major individual shareholder: Twitter founder Jack Dorsey.

According to Investopedia, Vanguard has more than $7.50 trillion in assets under management (AUM), surpassed only by BlackRock, Inc ($9.01 trillion in assets under management), which also has a big effort (6.5%) on Twitter.

Vanguard is the “world’s largest issuer of mutual funds and the second-largest issuer of exchange-traded funds (ETFs),” Investopedia also notes.

Vanguard’s move is an apparent attempt to thwart Musk’s attempt to take over Twitter and restore some semblance of free speech to the platform.

Twitter’s board of directors held an emergency meeting Thursday afternoon to evaluate Musk’s $43 billion offer, valued at $54.20 per share. CEO Parag Agrawal spoke to shareholders about the offering at the meeting.

Major Twitter shareholder Saudi Sheikh Al Waleed rejected Elon Musk’s offer, which is well above Goldman Sachs’ estimated $30 per share price target.

But Musk said at a TED conference Thursday that there is a “plan B.”

“Twitter has become sort of a de facto town square,” Musk said. “So it’s really important that people have both the reality and the perception that they can speak freely … so that there isn’t any kind of behind-the-scenes manipulation, either algorithmic or manual.”

“My strong intuitive feeling is that having a public platform that is maximally familiar and inclusive is critical to the future of civilization,” Musk continued. “The economy doesn’t interest me at all.”

“I’m absolutely obsessed with the truth,” Musk added.

Musk was asked what would happen if the Twitter board rejected his offer to buy. “Is there a plan B?” he was asked.

“There is,” Musk said during the TED appearance in Vancouver.

However, Musk admitted on Thursday that he is “not sure” if he can actually buy Twitter outright. Twitter confirmed it had received its offer, but the board has yet to review its offer. Musk has said the offer is his “best and last.”

Musk also made it clear that the reason he is transitioning to taking over his Twitter is because he is a free speech absolutist who believes it is necessary for the future of civilization.

“A good sign of freedom of speech: can someone you don’t like say something you don’t like?” he said on Thursday. “If that’s the case, then we have freedom of speech.”

Twitter’s board of directors is reportedly considering a “poison pill” strategy to prevent Elon Musk from significantly increasing his stake in the company Wall Street Journal reported. This defense strategy, also known as the “Shareholders Rights Plan”, makes hostile takeovers more difficult and more expensive for the buyer.

A “poison pill” strategy would allow existing shareholders to buy additional shares at a discount, which would then effectively dilute the opposing party’s ownership interest.

However, Twitter’s board of directors has a legal obligation to do what is in the best interests of shareholders. If Twitter fails to do so, the company can be sued. After such a lawsuit, the stock will plummet, and Twitter will be even more ripe for the hostile takeover. It’s a loser/loser proposition for Twitter. Giant Corporation steps in to block Elon Musk’s hostile takeover of Twitter

Jake Nichol

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