Musk sued over Twitter takeover “I will increase my Twitter sales 5 times”
After Tesla CEO Elon Musk was sued by some Twitter shareholders to cancel or postpone a takeover deal, he set out a specific goal to increase Twitter sales fivefold by 2028.
On May 7 (local time), according to foreign media such as the New York Times (NYT) and Reuters, the Orlando Police Pension Fund in Florida, USA, filed a lawsuit with a local court in Delaware. The reason is that Musk’s plan to complete the Twitter acquisition process by the end of the year is against Delaware company law.
The Orlando Police Pension Fund claimed that Musk currently owns a 9% stake in Twitter and is an “interested shareholder” with constraints on the acquisition. It went on to argue that if Musk did not agree to the acquisition of two-thirds of Twitter’s voting stock, which Musk did not secure, the deal could not be completed and he would have to wait three more years. Delaware company law provides for an objection mechanism against the expedited merger process in order to “protect shareholders’ voting rights” during the merger and acquisition process.
However, Charles Enson, who served as the director of the Center for Corporate Governance at the University of Delaware, said, “It is a difficult task to prove the status of a stakeholder with restrictions on acquisitions.” .
As the merger and acquisition problem does not subside, Musk announced to investors on the 8th (local time) that he would increase Twitter sales to $26.4 billion by 2028. This is more than five times higher than Twitter’s revenue of $5 billion (about 6.3 trillion won) in 2021. It is interpreted as an attempt to resolve the suspicion of the existing Twitter shareholders and investors by making an external declaration.
Musk also announced that Twitter’s advertising revenue, which accounted for 90% of its total sales in 2020, will be reduced to 45% of its total sales, or $12 billion, by 2028. Instead, it plans to increase usage fee income by more than $10 billion (about 12.705 trillion won) and replace advertising revenue that has decreased due to data usage fee income.
Quantitative growth is also promoted. The number of Twitter users, which was 217 million as of the end of 2021, was set to quadruple to 931 million by 2028. It plans to increase the number of subscribers to ‘Twitter Blue’, a paid subscription service launched last year, to 159 million by 2028, and to secure an additional 104 million users by 2028 by launching a new paid subscription service, Twitter X. Musk said that this will increase Twitter’s revenue per user from $24.83 per year in 2021 to $30.22 per year in 2028.
Musk has consistently emphasized Twitter’s structural reforms. It is argued that the number of accounts for advertising should be reduced and the tweet editing function and subscription function should be activated. Therefore, if Musk’s takeover of Twitter is completed, there are speculations that he will take over as interim CEO, spurring restructuring and business transformation.
[ⓒ 매일경제 & mk.co.kr, 무단전재 및 재배포 금지]