Can someone explain why Twitter was sold in the first place?

[diva77]

I must've missed the news that day. How exactly was Musk able to acquire twitter -- was it simply because he was able to buy all the stock? Why did they sell it to him? Couldn't they have refused? I just don't get it. I did google and found things like this article:

https://www.indiatoday.in/technology/features/story/why-did-twitter-sell-itself-to-elon-musk-he-made-an-offer-they-couldn-t-refuse-1942056-2022-04-26

[republianmushroom]

1. profit dollars

[diva77]

3. true - Musk offered far more than they thought it was worth; but they didn't figure in the

emotional, political and societal value -- those things should have been taken into consideration.

Time for a publicly owned analog to be established!!

[Dorian Gray]

26. Business owners looking for a pay day hardly

ever figure in the emotional, political or societal value. That's why we can not let business run without checks.

[GreenWave]

2. Some idiot overpaid, so I'm told.

[diva77]

5. true - too bad they didn't factor in the cost to society -- that would have made it priceless

He underpaid IMHO

[no_hypocrisy]

4. 1. Musk made the offer.

2. The Board of Directors reviewed the offer.
3. The shareholders chose to sell their shares to Musk at the designated price.

[diva77]

6. what percentage of the shareholders chose to sell their shares to Musk?

[moonshinegnomie]

7. my guess is an overwhelming number

if you own a stock worth $30 and someone offeres you 54.20 your going to sell. (and i was one of them that sold)

[diva77]

10. probably someone's financial advisor or a mutual fund -- people with no emotional attachment to the

stock simply trying to increase gains for their clients.

[MichMan]

19. Which from a fiduciary point of view, they are legally required to do.

I sure as hell aren't paying my IRA management company to turn down transactions that are in my best financial interest, because they have an emotional attachement to them.

[womanofthehills]

14. Prince Alwaleed of Saudi Arabia - a major stockholder of Twitter

Last edited Fri Dec 16, 2022, 09:19 PM - Edit history (1)

Said he would not sell his shares. Made the news big time-but ……then he rolled the money over to Elon after all. Alwaleed’s cousin, Mohammed bin Salman,locked Alwaleed up and made him give him a portion of his holdings. Seems like bin Salman loves Twitter. Dorsey said a few days ago that he wanted to move on from Twitter to his interest in crypto

Billionaire Prince Alwaleed Rejects Elon Musk’s Twitter Bid.
(Bloomberg) -- Saudi Arabia’s Prince Alwaleed bin Talal rejected Elon Musk’s bid to acquire Twitter Inc. for $54.20 per share, saying the deal doesn’t “come close to the intrinsic value” of the popular social media

platform.

[diva77]

16. thanks for this info

[moonshinegnomie]

28. i just looked it up on the sec edgar site

98.6% voted in favor


https://www.sec.gov/Archives/edgar/data/1418091/000119312522244289/d403306dex991.htm

[diva77]

40. Interesting - thanks for finding this & posting.

[sanatanadharma]

8. Capitalism demands return on investment

It is said that capitalists will sell you the rope with which to hang them.
Selling the company was the return; it would not matter had they known that the business was going to die.

[diva77]

11. The ugly ugly underbelly of capitalism!!

[lame54]

9. Because they found a schmuck with a spare $44 billion

[diva77]

12. time to return to the 90% (or more) tax rate for billionaires!!!

[brooklynite]

27. Wouldn't affect Musk...90% rate applied to income, not wealth.

[oioioi]

32. Where there's a will, there's a way...

"For decades, the wealthy and the well-connected have put American government to work for their own narrow interests. As a result, a small group of families has taken a massive amount of the wealth American workers have produced, while America’s middle class has been hollowed out."

"The result is an extreme concentration of wealth not seen in any other leading economy. The 400 richest Americans currently own more wealth than all Black households and a quarter of Latino households combined. According to an analysis from economists Emmanuel Saez and Gabriel Zucman from the University of California-Berkeley, the richest top 0.1% has seen its share of American wealth nearly triple from 7% to 20% between the late 1970s and 2016, while the bottom 90% has seen its share of wealth decline from 35% to 25% in that same period. Put another way, the richest 130,000 families in America now hold nearly as much wealth as the bottom 117 million families combined."



"That’s why we need a tax on wealth. The Ultra-Millionaire Tax taxes the wealth of the richest Americans. It applies only to households with a net worth of $50 million or more—roughly the wealthiest 75,000 households, or the top 0.1%. Households would pay an annual 2% tax on every dollar of net worth above $50 million and a 6% tax on every dollar of net worth above $1 billion. Because wealth is so concentrated, this small tax on roughly 75,000 households will bring in $3.75 trillion in revenue over a ten-year period."

https://elizabethwarren.com/plans/ultra-millionaire-tax

[brooklynite]

36. Perhaps she can take that up with President Biden, who doesn't support the concept.

Nor would it stop Musk from relocating back to South Africa with his wealth and running Twitter from there.

[oioioi]

38. "Nor would it stop Musk from relocating back to South Africa"

Well, that's a start.

[Voltaire2]

13. Space Karen offered 2 to 4 times the actual value.

The board of directors are obligated to maximize shareholder value, so once Musk signed the papers and demonstrated he had the financial arrangements in place to make good on his offer, there was really no other choice.

The only way the board could have said no would have been a counter offer at an even higher price from some other idiot.

[diva77]

15. ok - this is the kind of info I suspected but couldn't find -- is there a law somewhere that says

the B of D is obligated to maximize shareholder value? This was only a short term value maximization as far as I can tell. it's all so absurd.

[Voltaire2]

47. No specific law.

But they do have to act in the corporation’s best interests and they would likely find themselves being sued for rejecting a vetted bid this far above the actual stock price.

[Pantagruel]

17. Consider

If Dorsey hadn't accepted that offer generally assessed at 3-4X fair value of the business, he would have been sued by shareholders the next day. It's his fiduciary responsibility, his responsibility to "tweeters" comes second.

[diva77]

18. ok, got it. thanks.

[littlewolf]

22. This

[2naSalit]

25. +1

[Hermit-The-Prog]

20. Twitter could be sold and therefore it was.

If it's going to be called "social media", then it should be something that can't be sold, but rather whose ownership is distributed within the society it serves. See Mastodon.

[RockRaven]

21. He offered to buy the whole company at $54.20/share. Get it? fifty-FOUR-TWENTY?

Isn't he funny? 420! Like pot! Hahaha!....


The board pretty much couldn't refuse because he was offering such an overpayment compared to the current stock price that they'd be violating their fiduciary duties to the shareholders if they didn't accept. So the board went along with it, and it was put to a shareholder vote. And the shareholders said: "oh, you're gonna buy this for 25-50% more than it has been trading for recently -- which itself is an already unrealistic and inflated value? Hell yeah, gimme that cash, take the stock!"

[Just A Box Of Rain]

23. Musk tried to back out. Twitter insisted he proceed.

The price Musk had offered was far beyond any reasonable value and they cashed out.

[Bucky]

24. Twitter was swimming in debt. It's not like they were profitable. Most social media companies aren't

Selling for a cool (and overprice) $44b, they cashed out big and passed their debt onto a naive sucker. Lols.

[moonshinegnomie]

30. nope they werent profitable

[budkin]

29. Because the idiot agreed to purchase it for way over its worth

And they called him on his bluff. He tried to back out but he was legally bound.

[diva77]

31. Thanks, everybody - every single response was helpful to my understanding the issue(s)

[modrepub]

33. If You Were A Stock Holder In A Company

that had only a few profitable quarters and $1.3B in debt and someone came along and offered you $44B to take it off your hands what would your response be? I know what I would have done.

[Takket]

34. they sold because he offered them a billion dollars for a rusty bike with a wheel missing

[Initech]

35. It was a hostile takeover.

I'm heavily convinced that Elon bought Twitter with the intention of destroying it to please a small minority of extremely batshit crazy conspiracy theorists. Every day, the evidence is growing that this was a targeted political hit job.

[brooklynite]

37. Speaking of crazy conspiracy theories...

There is no evidence for the theory you're convinced of. If that was his goal, he could just pull the plug at any time. Occams Razor suggests they wanted an owner who would let them participate again.

[Initech]

41. Elon is a perfect example of someone being brainwashed by social media propaganda.

I'm sure that he heard the lies and the bullshit coming from people like Alex Jones and Sean Hannity about Section 230 and "shadow banning" and decided that he needed to do something about it. Conservatives weren't being banned from social media for posting conservative viewpoints. They were getting banned because they were saying racist and sexist shit and threatening violence. Letting these people back on was a colossal mistake, You should never play with Neo Nazis and white supremacists and people who threaten to murder others. That's playing with fire.

[brooklynite]

42. Again: he own's the company...

He could shut down the system and sell the parts tomorrow if he wanted to.

[Initech]

43. My point is he wouldn't have felt the need to buy a social media company...

If he wasn't brainwashed by social media propaganda. That shit is very powerful and very bad for you.

[leftstreet]

39. People forget Eloon tried to get out of the deal

Back in July he claimed Twitter misrepresented spam and bot accounts, blah blah blah

Twitter threatened to sue him, things go back and forth, a court told ruled he had to complete the deal or pay a $1billion penalty

Moron should have paid the penalty and walked away

[Xolodno]

44. Twitter has been trying to sell itself for awhile.

The then head honcho's didn't know enough about running a business and had enough trouble keeping their head above water, they were only profitable for two years. Wall Street saw a value in the company if the right management finally came along.

Disney was close to buying it, but eventually Bob Iger then and now current CEO, pulled the plug. He realized with all the controversial stuff on twitter, it could negatively effect the "family orientated" part of the business.

I'm gonna guess that Musk's ego got to him and decided that he could turn around twitter and make it profitable. Thing is, its still too early say he's failing, yes there is turbulence now, but that may or may not translate long term. And if he pulls out of this and does make it profitable, other tech companies are going to take notice.

[Laura PourMeADrink]

45. Very good article! Thanks!

[Polybius]

46. Because it was the smart thing to do

If someone offers you something like 4 or 5 times what your company is worth, it would be bad business not to sell.

[Iggo]

48. Because Br'er Twitter said, "Please Mr Musk. Please don't buy us!"