Now that Elon Musk has told the world, in a filing with the Securities and Exchange Commission, that he has obtained up to $46.5 billion of financing commitments for his $54.20-a-share offer for Twitter, the next step for the Twitter board will be to formally reject his offer. The two sides are reportedly meeting today to re-examine Musk’s bid, the prelude, perhaps to a more aggressive negotiation. The offer is inadequate, the board will lament. Expect that response soon, probably early this coming week.
It won’t be true, of course. His $43 billion offer for Twitter is more than adequate, and more importantly, it is more than fair from a financial point of view to the Twitter shareholders. Sure, there are plenty of stick-in-the-muds who continue to complain that, once upon a time last summer, in a very different market for tech stocks and with very different interest rates, Twitter’s stock traded in the mid-$70s per share. But that is no longer the right measure of Twitter’s value. Just as it is no longer particularly relevant that Netflix stock traded as high as $700 a share last November. Is there anyone out there thinking, “Oh, well, there is no plausible takeover offer for Netflix unless it’s for more than $300 billion” now that it’s valued at around $100 billion? Of course not. The consensus seems to be that Netflix was wildly overvalued then, as my partner Matt Belloni wrote last week, and that streaming is in trouble. (I’ll return to this correction momentarily.) Twitter ain’t getting any offers in the $70s per share, trust me.
So what is Elon’s next move after the Twitter board, which owns 0.2 percent of the Twitter stock (excluding the two percent stake held by co-founder and Elon-buddy Jack Dorsey, who is leaving the board next month), likely rejects his offer? This is where things potentially get very interesting.