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WHAT HAPPENED?
Elon is buying Twitter, he’s now become the single largest individual shareholder of Twitter (with the exception of Vanguard).

HOW MUCH IS HE OFFERING?
Twitter has roughly 768 million shares in total outstanding – if you take that number and multiply it by $4.20 – that’s $3.2 billion dollars. You know you’re rich when you can pay billions of dollars extra just to make a 4/20 joke. 83.5% voted yes – that he should take company private.

WHO CARES?
This is extremely important not only because what it means for shareholders of Twitter, and even people who invest in Bitcoin and Dogecoin – but most importantly what it means for free speech. It’s a very interesting story and there’s a lot more to it than meets the eye.

WHAT IS A BOARD OF DIRECTORS?
The board of directors of a public company are elected by people who own at least 1 stock in a company – 1 stock equals 1 vote. The board is supposed to make decisions on important things like dividends, figuring out what to pay their senior executives, and of course potentially merging or selling the company. They also have what’s called a fiduciary responsibility to their shareholders. Elon was recently invited to become a board member but he backed out because it would prohibit him from owning more than 15% of the company.

FIDUCIARY WHAT?
That means all decisions must be based on the best financial interests of the shareholders. They must consider all options if it makes financial sense. And this is where the story begins.

HOW COME TWITTER DOESN’T WANT ELON?
Once Elon rejected the offer, the board of directors responded to Elon with a “limited duration shareholder rights plan” also known as the “Poison Pill”.

WHAT IS A POISON PILL?
Moving forward, the board voted that if anyone tries to buy more than 15% of their company without their approval, they would allow themselves to create new shares which shareholders can buy at a discount (the only exception being the person who triggered the event which in this case would be Elon). This policy would last until April 14, 2023.

WHAT ARE THE PROS AND CONS?

PROS: It prevents an “undesirable takeover”, and it opens up negotiations for future buyers to sweeten the deal and offer more money.

CONS: New shares will have to be created, and if you don’t exercise your right to buy those new shares at the cheaper price, your shares become “diluted” or worth less than they used to.

Another downside is that it makes companies less attractive to potential buyers because they may not want to deal with the hassle of buying Twitter.

WHY IS THE BOARD MAKING IT SO HARD TO BUY THE COMPANY?
That’s what Elon’s defense is. He says the board is not exercising their fiduciary responsibility by making it harder for them to make money. Elon is offering more than the current value of Twitter which as of right now, is not a profitable company.

WHO BENEFITS FROM THIS & WHAT IS THE REAL REASON FOR BUYING TWITTER?
Watch the video to find out!

*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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