What’s with Twitter? Social giant poisons self with a pill in fight with Elon Musk

Editor’s note: Veteran Raleigh-based tech attorney Jim Verdonik, founder of Fire Pit Cell which is dedicated to exploring Freedom issues, and co-founder of Innovate Capital Law, discusses Elon Musk becoming Twitter’s largest stockholder and offer to take Twitter private. This article follows two earlier articles about Elon Musk and Twitter. The first discussed Musk’s bid. The second focused on free speech issues and Big Tech. Verdonik has been actively involved over more than two decades in helping Triangle companies go public or be sold.

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RALEIGH – Have you heard the warning not to take cures that are worse than the disease?

Twitter’s Board has put in place a “poison pill,” to ward off Free Speech disease

If Elon Musk’s ownership increases to 15% or more without Twitter’s Board of Directors approving, all other shareholders will have the right to buy shares at a discount, which will dilute Mr. Musk. The poison pill expires April 14, 2023.

Does that finish Mr. Musk?

Hardly, Musk telegraphed his Plan B.

He can sell his shares at a big profit.

He can make additional profit by short selling Twitter’s stock.

What will Mr. Musk do with the profits from selling his Twitter shares?

Kudos if you answered that he will use his Twitter profits to build a competitor to Twitter.

More competition for Twitter means a lower stock price. A lower stock price means more profits for short sellers.

Of course, poison pills are most useful for buying time for Twitter to find a white knight. Another company to buy Twitter.

But Twitter’s Board just turned down a $54.20 cash offer that’s a substantial premium to Twitter’s market price. Any buyer will have to pay more than that. A buyout at a higher price will afford Mr. Musk more profits to build Twitter’s competitor.

In either scenario, Twitter will be financing a fierce competitor, who doesn’t like losing.

How much will anyone pay for the privilege of a war to the death with Elon Musk?

How much will anyone pay for the privilege of being reviled as a Free Speech hater by half the country?

Will you take one spoonful of poison with your Twitter tea or two?