To escape Elon Musk, Twitter could be sold to Microsoft

Stephen Lam/Reuters

Twitter may not want to be sold to Musk, but it could soon find itself with few alternatives to warding him off.

Periodically, over the last two decades, a similar situation has occurred in the twitter: The company enters a dead end and needs to consider selling. In the mid-2000s, Twitter received proposals from Yahoo It’s from Facebook. Then, a few years later, he received an offer from the Google and, in 2016, from Disney. Facebook’s $500 million proposal probably stands out the most, as it was the most considered of all. It arrived at a time when Twitter CEO Jack Dorsey had just left the company (sound familiar?), and questions were swirling around whether the company would ever live up to its economic potential.

“All of the Twitter takeover events have always been around other board dramas or leadership changes, as, you know, is happening right now,” recalls Jason Goldman, founding executive of Twitter. He spent nearly a decade on the Twitter board and was there for bids from Yahoo, Facebook and Google. “Twitter has the kind of cultural resonance that much larger companies would like to have, a larger cultural footprint than the size of the business suggests,” says Goldman.

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Today, Twitter is in trouble again, and it might be time to add other candidates to the list, such as Microsoft or SalesForce. Let me explain: Twitter now has a new CEO, Parag Agrawal, trying to grow the business to bridge that gap between commercial potential and cultural significance. He is facing advances from the richest person in the world, Elon Musk.

Musk wants to buy Twitter for $54.20 a share, a modest premium over recent prices, valuing the company at $43 billion. (This is classic Musk style: “420,” at the end of the stock price, is a deliberate reference to April 20, which pot enthusiasts view as a holiday.)

In making his proposal, Musk expressed skepticism about the current management. He said he wanted Twitter to be “a platform for free speech around the world” and added, “I now realize that the company will not thrive or meet this social imperative in its current form. Twitter needs to be transformed like a private company.”

Twitter may not want to be sold to Musk, but it may soon find itself with few alternatives to shunning him. And if Musk doesn’t complete the deal, he may have unwittingly opened the door for other acquisitive parties to come in and launch their own offers.

Twitter does not have the protection offered by the two classes of shares that Meta, Snap and Alphabet do. Twitter could adopt a “poison pill” strategy, selling shares at a discount to dilute Musk’s stake. By doing so, Agrawal could take control of Twitter, but it’s unclear how much of Twitter would be left after this stock sale affected the company’s market value.

To escape Musk, Twitter may need what’s called a “white knight” in the buying game, a well-capitalized suitor it can get along with more easily than the electric car tycoon. The most famous example of such a strategy was Warren Buffett’s bid for Gillette in 1989, when he bought $600 million worth of preferred stock to end a hostile takeover attempt at Coniston Partners.

Buffett isn’t getting into the game with Twitter. In fact, when you consider who might be able to rescue the social media platform, it’s a pretty short list. Consider previous suitors.

Facebook/Meta is likely out because it is the subject of an ongoing antitrust investigation by the Federal Trade Commission. So too is Google, which faces a Justice Department review. Yahoo? It is unlikely. Disney certainly has the money and likely wouldn’t face much criticism from regulators. But Bob Iger, the Disney CEO who thought about buying Twitter, is gone, and he had nothing nice to say about that possibility in his 2019 memoir.

“Twitter was a potentially powerful platform for us, but I couldn’t overcome the challenges that came with it,” writes Iger. “They included how to deal with hate speech and make complicated decisions regarding free speech… and general anger and lack of civility.” (Many of these issues still plague Twitter today.)

OK, so who can rescue Twitter? Here’s Wall Street’s thinking: Salesforce could afford the purchase, and co-CEO Marc Benioff once seriously considered buying Twitter before changing his mind. Salesforce’s other co-CEO, Bret Taylor, is certainly familiar with Twitter. In fact, he is the chairman of the board of Twitter. But it’s unclear whether that would make Salesforce more or less likely to turn to Twitter.

PayPal is an underdog competitor after chasing and then abandoning a $45 billion deal with Pinterest last year. The PayPal-Pinterest link made sense when you thought of Pinterest less as a social network, and more as a social shopping site – with PayPal having a lot of information about checkout transactions.

ALSO READ: Twitter shareholder sues Elon Musk for misleading investors

Another likely competitor appears to be Microsoft, Wall Street sources say. The company declined to comment on whether it was actively considering joining the Musk-Twitter feud.

Of course, Microsoft has signaled a desire to buy a social media company recently. In 2020, it enthusiastically pursued a roughly $50 billion takeover of TikTok, losing only because of interference from the Trump administration. Furthermore, the purchase of LinkedIn for US$ 26.2 billion (R$ 123.1 billion) has already proved that Microsoft can turn a quixotic social network into a cash machine.

LinkedIn’s revenues increased from about $2 billion in 2016, when Microsoft bought it, to more than $8 billion, according to Statista, a data analysis company.

“Microsoft has added tremendous value to Linkedin,” says Brent Thill, an analyst at Jefferies. “And if you think about it, Microsoft would add professionalism, trust and respect.”

It’s true: a Microsoft offer probably wouldn’t come partially framed as a reference to the marijuana culture, which, oddly enough, counts only as the latest odd development in Twitter’s tortured history of trying to sell itself.