Tesla CEO Elon Musk changed his mind and decided to walk away from his recently accepted seat on Twitter’s board. It creates a lot of confusion and opens the door to a hostile takeover.
If you were living under a rock last week, you might have missed the whole saga about Musk investing in Twitter.
On Monday, an SEC filing revealed that Musk has been buying shares of Twitter and that his investment now surpasses $3 billion or about 9% of the company’s total outstanding shares.
It’s enough to make him the single largest shareholder, and he even has four times more shares than Twitter cofounder and former CEO Jack Dorsey.
Musk didn’t make his plan clear with this investment in Twitter, but as we noted, he is not known for making passive investments and we suspected that he would look to be involved.
Tesla’s CEO had recently talked about starting a competing social media platform and how he believes that Twitter is dying and moving away from free speech.
A day after revealing his stake in the company, Musk accepted an offer from Twitter’s board and management to join its board of directors. This signaled that Musk was willing to join the company and work with them from the inside.
However, today we learn that Musk changed his mind just a few days later.
Twitter CEO Parag Agrawal announced today in a memo sent to employees:
We announced on Tuesday that Elon would be appointed to the Board contingent on a background check and formal acceptance. Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board. I believe this is for the best. We have and will always value input from our shareholders whether they are on our Board or not. Elon is our biggest shareholder and we will remain open to his input.
The CEO warned of “distractions ahead” and for employees to “tune out the noise.”
Musk changing his mind on joining the board could open the door to a hostile takeover as there was a stipulation to his board seat that prevented him from owning more than 14.9% of Twitter’s outstanding shares as long as he is on the board.
Now that he is no longer joining the company’s board, Tesla’s CEO is free to buy as many shares as he wants in the social media platform.
The news sent Twitter’s shares down more than 3% in pre-market trading, but the whole market is down this morning. Tesla’s own stock is down 3%.
Musk liked this version of events:
FTC: We use income earning auto affiliate links. More.