Since everyone has decided that Elon Musk’s $54-a-share offer for Twitter is just a troll, the question remains who else can buy the company? Is there a suitor who can digest Twitter and deal with all its baggage? Or is the company destined to be a middling underachiever?
Twitter had adopted the poison pill plan that would make it difficult for Musk to achieve its goals and increase his stake beyond 15 percent ownership of Twitter. If he increases his stake to above 15 percent, then Twitter has the right to sell more shares to other buyers at a discount. That is, Twitter will find a white knight. The New York Post reported that private equity giant Thoma Bravo was considering a bid. The firm, which manages $100 billion, definitely has the resources to friend Twitter and mute Musk.
If not Thoma Bravo, then some other private equity firm could make a bid for Twitter. They obviously would know that they are buying an underperforming asset and squeezing out operational inefficiencies. A PE buyer would likely find a better management team than one currently in place, something the current board of directors should have done anyway.
When viewed with a broader lens, Twitter doesn’t have many options. Apple won’t want the mess on its hands. Thanks to its size and corporate needs, it is already threading a needle when it comes to political pressures across the globe.
Facebook and Google have their problems, and both companies are already dealing with anti-trust problems. I would put Amazon in the same category — they too are on a public enemy shortlist in Washington DC and Brussels. Previously rumored suitors such as Disney are likely to stay away from Twitter which has become a political hot potato.
The one realistic option for Twitter is Microsoft, which has the resources to pull off the deal. More importantly, it has friends in high places — Washington DC — to get the deal approved by the regulators. And ultimately, it might now be such a bad option for the company to be part of Microsoft.
The last path is something I suggested yesterday — get a new CEO, one who is capable of fixing the company’s fundamentals, making it more efficient and ultimately profitable. A strong player could start by putting together a syndicate of investors — both private and strategic to push Musk back into its corner of the Internet.
And if that does happen to pass, in a few years, we might look back at Musk’s bid for Twitter as the best thing that happened for the company. Given Twitter’s history of meandering mediocrity, I am not holding my breath.
April 16, 2022. San Francisco