For the last couple of weeks, the news has been full of stories regarding the relationship between Elon Musk and Twitter. Like an episode of Succession come to life, first Musk bought a stake and was going to join the Board. Then he wasn’t. Then he wrote a letter to the Board seeking buy the entire Company for some $46.5 billion.
Of course, not even the richest man in the world apparently has this much lying around in a checking account and there has been doubt expressed as to how Musk would finance the deal. And now the Company has implemented what is known in the industry as a poison pill.
So how does this episode end? What is a poison pill anyway and how does implement one fit with the Board’s fiduciary obligations to the shareholders? How are they supposed to analyze an offer like Musk’s, one that exceeds the current trading price of the stock? What is likely to happen next at the Board level. Also, Musk has previously gotten into some trouble with the SEC – an agency he only last week described as a bunch of bastards in a Ted Talk. How is the SEC likely to view the approach being taken by Musk?
The Musk/ Twitter situation is not something that can be explained in 280 characters. We are fortunate to have with us Erich Schwartz, a professor at the University of Texas and a former senior enforcement attorney at the SEC.
Tune into Mountain Money every Monday at 9am here on KPCW Park City.
