Musk’s Twitter pushback opens door to hostile takeover – Reuters News in France and abroad

Billionaire Elon Musk’s reversal of his decision to join Twitter’s board of directors opens the door to a hostile takeover and could lead to further volatility in the stock, analysts say.

Musk’s decision not to join Twitter’s board means he is no longer restricted to owning just 14.9% of the company. Now many analysts are suggesting that Tesla’s CEO could increase his stake and possibly try to establish control.

” [T]the change to his weekend saves the company from having to deal with a renegade director tweeting about board-level discussions. It would have been untenable,” Don Bilson of Gordon Haskett Research Advisors wrote in a note on Monday. “The flip side is that TWTR has to deal with a wildcard investor who already owns 9% of the company and has the resources to buy the remaining 91%. As volatile as Musk is, we could see a move like this happen shortly. Or we could never see it all. This overhang under which TWTR lives now is certainly seen as a distraction. »

Bilson pointed to Twitter CEO Parag Agrawal’s statement announcing that Musk would no longer be joining the board, in which he warned employees of “distractions” to come. Bilson told CNBC in a phone interview Monday that the company’s messages were “rather concerning.”

Ultimately, Twitter may decide to swallow a “poison pill” or shareholder rights plan to defend against a hostile takeover. But Bilson wrote that such a move carried the risk “of angering Musk and it might be best for TWTR to keep that arrow in its quiver for now.”

“It’s going to be quite difficult to commit to an investment thesis because you never know where the winds are going to blow,” Bilson told CNBC. “I don’t think anything is off the menu with this guy. »

Wedbush Securities analyst Dan Ives expressed a similar sentiment Monday morning.

“It’s clearly going to be a hostile situation,” Ives told CNBC’s Andrew Ross Sorkin on “Squawk Box.”

“Instead of Musk in the boardroom around the corner just saying no or agreeing with some board candidates, I think now it’s really getting to the point that in the next few days I think we’ll start to see if he’s going to get more hostile, more active – that’s what the street is focused on,” Ives said.

Twitter’s stock had its best day since its IPO after Musk’s more than 9% stake in the company went public. It jumped another 2% the next day when the company revealed Musk would join the board. Stocks fluctuated on Monday and the unpredictability may continue.

“While Mr. Musk’s priorities are unclear, we expect his tweets to receive increased attention, which could lead to stock price volatility,” KeyBanc analysts wrote Monday after the news broke.

But Gene Munster, managing partner of Loup Ventures, said on CNBC’s “Squawk Box” that he thought “most of the drama is over.”

Munster said he based this prediction on the assumption that it would have been wiser to take control immediately if he intended to. He also said he thinks taking over Twitter just isn’t where Musk wants to spend so much time.

“Understand that there is something that is important to him around free speech and I think he wants to push that forward. Understand that he sees this as an opportunity as big as electrification and as big as space travel,” Munster said. “But ultimately I think that [is] just one thing too many on the plate for him to take over. »

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Musk’s Twitter pushback opens door to hostile takeover – Reuters News in France and abroad