Background: Musk wants to buy Twitter at a 38% markup. The deal is a no-brainer for shareholders, investors, and anyone focused on business. However, the Twitter board rejected the plan and is fighting the takeover with a poison pill.
What’s a poison pill? It’s when a company intentionally dilutes its share value by giving its shareholders the ability to purchase shares at a steep discount. Shareholders could then prevent Elon Musk from gaining a majority stake by unfairly outbuying him. The poison pill hurts the company but is effective at preventing takeovers.
Why go through all this? Twitter’s leadership is focused on thwarting the deal and losing billions because what’s at stake isn’t profit or even a tech company; it’s a censorship apparatus protecting the establishment.
Why is Twitter so valuable? Despite the many other social media platforms and even Twitter alternatives like Trump’s Truth social, Twitter has tremendous value because global leaders, businessmen, politicians, and journalists are all on the platform. Narratives and political movements are crafted there. It’s also the only site where people can press the elite.
The Biden Administration will fight it: The Biden administration has made it explicitly clear what they want to be censored. They’ve also made it clear that there will be regulatory consequences for social media companies that don’t comply. Through demands and threats, Twitter is effectively the government's censor.
- A Former SEC chair said that Elon Musk’s bid to buy Twitter is ‘guaranteed’ to be shut down by the Biden administration.