It's bonus season on Wall Street and the world's richest man, Elon Musk, is perhaps rewarding himself to an expensive treat -- buying Twitter.
His $44 billion bid for the social media platform is the biggest acquisition financing ever put forward by one person, according to Reuters. Musk has promised to cut a $21 billion personal cheque, but finding those billions shouldn't be hard, as his wallet is about to be bumped up with $23 billion, as part of his 2018 performance-linked remuneration at Tesla Inc.
The bonus payout is yet to be signed off by the Tesla board and neither did Musk mention if the windfall will fund his latest acquisition. Still, the Twitter purchase, coming five years after he first casually showed interest in buying the microblogging site, puts him in the catbird seat from where he can strike an item off the bucket list.
The deal stands out for several reasons. The most surprising is the suddenness with which it went from a hostile bid to a takeover sealed with the board's blessings. Just weeks ago, Musk was an unwelcome bidder prompting the Twitter board to take a poison pill in an attempt to block Musk from increasing his stake by more than 15% without its approval and instead allowing existing investors to buy shares at a heavy discount. As it turned out, Musk went well prepared with plan B, and was considering bypassing the board, otherwise called a tender approach, to win over shareholders. For a moment, it appeared as though we were about to witness a fierce takeover battle, but then the board backed off and everything was settled magically with a precision only Harry Potter can conjure at Hogwarts. It's now over to the regulators to pore over the proposal with a spyglass in hand.
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Musk did utter the right words such as concerns about censorship, content moderation and politicisation of the platform, but critics warn that the billionaire's motive could be to actually seek 'freedom from accountability' and operate unconstrained by laws, regulations and shareholder scrutiny. If so, Twitter's purpose of being a 'public good at a protocol level,' stands no earthly chance.
Twitter founder Jack Dorsey endorsed Musk's offer to take it 'back from Wall Street,' but it'll be interesting to see how Twitter will break the buck under Musk, who spends zilch on advertising. This, at a time when the world's top brands like Coca Cola, Starbucks and Unilever are freezing advertising on social media platforms for reportedly profiting from hate speech and promoting problematic content.
Lastly, one must closely watch out for the future of cryptocurrencies. Musk being one of the votaries of crypto assets, it prompted speculation that he could revisit Dorsey’s unfinished agenda of creating a decentralized blockchain-based protocol for social media that Twitter could run on. While this may be up for discussion in subsequent months, for now, crypto assets are witnessing a rally that seems unstoppable.