So Elon Musk bought 9.2% of Twatter (my favorite name for Twitter) and this past week made a non-binding offer for the company. A CEO who I know asked my opinion.
Taking Twitter private at $54.20 should be up to shareholders, not the board
— Elon Musk (@elonmusk) April 14, 2022
The key issue here is whether a take-private transaction is able to unlock value or not. I seriously doubt it.
Forget that I think Twitter is a shitshow. Forget that I think Twitter is the dumpster of the ineffective, time-waster intellectual. I don’t see any value in Twitter other than in larping and getting off after a long boring day at work.
The people who voted with/for Elon, the 3 M followers, said that Elon’s taking over “will make it freer”. I doubt it, because I doubt Elon’s involvement in Twitter’s operations after he purportedly gets ownership of it. I am justified to complain about Twitter’s treatment of me on my nine years on the platform, nevertheless, I don’t see any real changes trickling down to your average user.
Still, taking- private transactions of large social media companies is largely untested. A bidding war appears to emerge:
“Thoma Bravo’s reported interest in a Twitter acquisition came the same day the social media company announced that it had adopted a “poison pill” policy that would allow shareholders to buy additional shares at a discount.”
Newsweek, 04-15-2022
No matter who ends up getting Twitter if the company sells itself, they won’t hold it for too long. What comes around, goes around.
P.S. I’m looking forward to Twatter cutting down my followers to 500 by next year.
Unless Elon buys it in which case we’ll hit 500K.
“Since Dorsey returned as CEO in July 2015, the company’s shares have fallen 6.2%, while Facebook’s have gained more than 121% during that time.
Bloomberg
“Elliott has a long history of agitating for changes at some of the world’s largest companies. This month, the firm disclosed a stake in Japan’s SoftBank Corp. and said it planned to push for a larger share buyback and governance changes at the firm’s Vision Fund.
Elliott has also pushed for changes at AT&T Inc., EBay Inc., Marathon Petroleum Corp. and Pernod Ricard SA.”
Scott Deveau, Bloomberg
…and some yoga poses
Twitter is a unique media property with loyal users. The user base of Twitter is organic, limited. (very different than the Facebook platform). As far as demographics go, Twitter users have more buying power than FB users have by and large.
I’ve done a back of the envelope LBO model where a private sponsor “PE” buyout of Twitter at a $28 Bn price today (a 21.7% premium) where Twitter though COGS and SG&A synergies. Twitter turns profitable in my Year 3 with a $32.56 MM EBITDA (Assumptions: equity contibution: 30%, blended interest cost: 30%, enterprise multiple, 7.8). More on that later1.
As a strategic tech buyer for Twitter, a see Apple doing wonderfully owning a unique news platform. Twitter’s board hired Goldman Sachs(NYSE:GS) and Allen & Co. LLP to explore strategic options. Are major suitors getting into a bidding war for TWTR ?
If you’re reading this you already know: Twitter has a future https://t.co/sTH8xfUC08 pic.twitter.com/CWPudts3PO— Bloomberg View (@BV) October 11, 2016
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