The "takeover battle" between musk and social media giant Twitter has introduced new external forces: Republicans in the US Congress want to step in and buy a base note, asking twitter to keep all kinds of communications, documents and information between musk and musk for future investigation.
On Friday, April 22, 18 Republicans from the House Judiciary Committee sent a joint letter to BRET Taylor, chairman of Twitter's board of directors, asking the company to keep all records and materials related to Musk's acquisition proposal, "including all electronic messages sent using official and personal accounts or devices, as well as records created using SMS, phone based messaging applications or encryption software."
According to the letter, this is a formal request from Congress to retain relevant records, which requires the company to prevent intentional or unintentional destruction or change of all documents, communications and other information, including electronic information and metadata, in order to respond to potential congressional investigations.
In addition to the information sent by musk to twitter, the records to be kept also include Twitter's consideration and response to Musk's acquisition proposal, as well as the company's evaluation of its shareholders' interests on the basis of the acquisition.
The letter also mentioned that the reaction of Twitter's board of directors to Musk's acquisition proposal and external opposition to Musk's future role in twitter "are worrying".
The analysis pointed out that US Republicans have always accused twitter of using "anti conservative" bias to audit platform user content. Today's joint letter suggests that if Republicans regain majority control of the house of Representatives after the November congressional mid-term elections, they may investigate Twitter's firm refusal to be acquired by musk and summon the board of directors to consider the relevant records of the acquisition. Musk advocated that the acquisition of twitter would reduce content censorship. This view won the favor of Republicans, who also kept vigilant against large technology companies.
On April 14, musk responded to the proposal of fans to "buy twitter", proposed to buy twitter for $54.20 per share, and refused to join the twitter board, which limits its shareholding. A day later, twitter announced the "poison pill plan" - using equity diluted anti takeover measures in response to the "fierce" musk.
A source revealed yesterday that Twitter's board of directors is preparing to reject Musk's acquisition proposal on the grounds of "too low bid" before April 28, because the company plans to release its first quarter earnings on April 28.
Musk is not discouraged. This week, he successively updated the regulatory documents submitted to the SEC to provide details of the acquisition.
For example, he said on Thursday that he had received $46.5 billion in financing commitments for the acquisition of twitter, two-thirds of which came from his personal assets and the rest from bank loans secured by twitter assets. Reuters said that this is the largest acquisition financing proposed by individuals in history, and contrary to the traditional acquisition financing design, the latter often takes the assets of the target company as collateral, and the debt accounts for the majority of the financing.
On Wednesday, he said he had created three independent holding companies, called X holdings I, II and III, all of which were established to acquire or merge with Twitter "directly or indirectly". These documents referred to the plan as "project X". Of course, there is no lack of analysis and speculation, which lays the foundation for musk to integrate electric vehicle giant Tesla, space exploration technology company SpaceX, tunnel company the boring company and neuroscience and brain computer interface technology company neuralink into a parent company in the future.
Others said that the reason why the market thinks Musk's proposal to acquire Twitter is "not too serious" is that he wants to use a lot of personal assets to acquire it and wants twitter to get rid of the "cash cow" advertising business on which it depends. These visions are always "silly".
Of the $33.5 billion in private assets musk plans to use, $21 billion will be cash. People familiar with the matter said that the twitter Board plans to ask musk to provide more details on the source of this part of the cash. Another $12.5 billion comes from the high-risk margin loan obtained by mortgaging Tesla shares to the bank, but musk will have to repay the loan if Tesla's share price falls by 40%.
Reuters believes that to double Musk's $33.5 billion in self owned assets, the value of twitter must rise by 1.4 times. If he uses only his own assets to fill one-third of the transaction consideration, the value of twitter only needs to rise by 0.7 times, and this investment will double. Bloomberg also said that the transaction structure designed by musk brings us $1 billion in debt service costs every year, which is a huge sum for twitter, which also lost money last year.
At the same time, musk said that he "did not care about the economy of this transaction at all", but felt that it was "extremely important for the future of civilization". These remarks deterred potential fund providers.
Banks may be worried about taking more risks, which will be blamed by financial regulators. At the same time, they also believe that Twitter does not generate enough cash flow to justify Musk's valuation of $43 billion. Private equity institutions that are extremely in pursuit of return on investment are therefore reluctant to join hands with musk.
On Thursday, media quoted insiders as saying that Thomas Bravo LP, a private equity company with assets under management of more than $100 billion at the end of last year, had told twitter that it did intend to make a takeover offer, but would not join Musk's acquisition plan, but would launch a separate one. Others said Softbank, one of the world's largest technology investors, had decided not to participate in the acquisition of twitter, although a company spokesman declined to comment.
Most private equity firms have been slow to move in because they are more willing to stay away from political disputes and worry about losing control of musk. Although private equity giant Apollo global management is considering participating in the bidding for the acquisition of twitter, it may provide equity or debt support to other interested buyers such as musk or Thomas Bravo LP.
This shows that there is still great uncertainty about whether musk, the "Silicon Valley Iron Man" as a deep user of twitter, can make a high-profile acquisition of this social media giant trapped in the vortex of public opinion and politics. However, the admission of Republicans in the US Congress also means that the follow-up development of the acquisition tug of war will still be wonderful.
Twitter opened higher on Friday, with an intraday high of 5.6%, rising for three consecutive days, close to recovering all the losses since April 18. However, the stock price was traded at $48, which is still a big gap from Musk's acquisition proposal with an 18% premium (US $54.20 per share), which means that the market still does not fully believe that musk can successfully acquire twitter.
