 Hello and welcome to episode 62 of the market maker podcast and in this episode we are going to focus on Elon Musk and his attempt to take over Twitter. I've had lots of emails sent to me privately asking for us to do an update on this and yeah we gave it a miss last week during Easter so we're raring to go. And as much as giving our take on the situation, it's obviously an evolving story but hopefully we can deconstruct it explains some of the kind of finance jargon around it as a subject matter hostile takeovers LBOs white nights poison pills. You name it, this story's got got everything so before I begin his just how's it going has your week been before I give a quick summary of the week. Yeah, going very well actually I was something quite cool happened yesterday I was credit Swiss I was doing the running the spring week programs which we've been involved with this week and actually yesterday I was like I don't get to be on the front line and much study more not like I used to be in terms of getting out and running our simulations and you know being in well certainly being in front of people right obviously covids pushed us all online so yeah it's quite nice to just get back on the front line, but what was quite cool I was running we were actually running our IPO simulation, focusing on the IBD side but yeah there were there are a few people in the group. There was a credit Swiss kind of spring interns who were just coming up and saying oh my god I listened to the podcast. In fact, I would, you know I've been I listened to the podcast the night before my interviews, you know just to make sure that I'm fully up to speed. And so yeah it's quite no pressure that right yeah that was nice to I guess it's odd when you're doing recording these things because basically it's me and you in a zoom meeting. And it's nice to know that there are actually people out there that listen to this and well by the looks of it get get some good value out of it so so so yeah it was it was nice nice to hear. Well look well we'll do our best to cover all investment banking divisions today because I can give you a quick a quick overview on my side from the global markets perspective. And then perhaps I can play a little naive and ask you the questions to go into this Twitter, you know must situation which definitely compasses a little bit more of the more investment banking side. Yeah, so let me let me run through a couple of the highlights of the week I'm sure everyone would have read and seen it by now but Netflix shares got absolutely decimated after they reported a loss of 200,000 subscribers during q1 the first such in a decade going one step further they forecast a further drop of 2 million this quarter. The other kind of related stocks like Spotify were down 11% on the same day. Disney were down about 7% as well, but the infamous fund manager Bill Ackman, you know if you thought those 50 bucks I've got in Netflix shares got hammered. The guy got it hard on that day he lost a cool $400 million in that one earnings release, he accumulated a stake of 1.1 billion, just in the last couple of months. And I can't remember the stat for the top of my head but roughly, I think they were 54 odd Wall Street analysts covering the stock. So this is when you're talking about an equity research team specifically putting out some notes, when they talk about the financials and forecasting of these companies. And I think it was something like 48 of them had a buy recommendation, and only three had a sell at that point so there's a lot of people nursing some severe hangovers on Netflix this week. Well, well Ackman that he actually bought you know yeah so as you say bought his stake in the last couple of months to do you know what he was trying trying to do. Not realizing there was another massive dip still to come, because what happened on that last earnings call for quarter four earnings, which was in January of this year. They revised down the subscriber growth forecasts for quarter one of 2022 and they revised it down to a growth of 200,000 subscribers. Obviously now it materializes it's lost subscribers right but that revision down of subscriber growth rates led to the stock dropping 30% in January. So that's where Ackman came in and waded in, got the bat out, bought a massive chunk and obviously now it's just dropped another 30%. And he's wearing a $400 million. I did read that his fund Pershing Square isn't it that he had record breaking 2019 2020 so I'm not going to cry over bills 400 million just yet. But let's pivot over to kind of broader economic view I guess that's impacting central bank thinking and the Federal Reserve Chair Jerome Powell outlined his most aggressive approach to taming inflation to date yesterday. So on Thursday this week, potentially endorsing two or more half percentage point interest rate increases. He described the labor market as overheated. I read this morning came out overnight latest report out of the Japanese bank Nomura, they're now expecting the Fed to go in to 75 clips now in June and July, following up on the 50 so they their strategy is they think they're going to go 50 75 75. Now, well I can tell by your face that this is can't see it but yeah we've been here before it feels like. So what world, what world are these analysts living on. Well, do you know, well, this is, I guess one thing that definitely students should be aware of these are sell side institutions. And so Nomura is the one that I've seen mentioned everywhere this morning, like everywhere doesn't doesn't go miss when you put out a bold call. The financial media love it. Now. I mean how often any of these calls correct I mean you could only go to like most big bank forecasting and they're woefully off the mark a majority of the time, but that the Nomura's names been out there dominated the news for the last 24 hours on that front but Nomura are right. We will have a very large recession in the United States in the second half of this year, large recession. They're talking about raising rates by 2% in over the course of what three, three months that that would be catastrophic. I would suggest. And then looking in Europe, the theme continues, because the Vice President, Louis de Gwendoz said the bank should be able to phase out asset purchases in July. That will pave the way for interest rate increases early as that month. That hawkish turn comes as several ECB officials have kind of said similar types of hawkish things. Money markets now betting on three quarter point rate hikes by December from the ECB. And then sterling is lower. It's quite a bit this morning actually it's just dropped through Eastern the futures market the 129 hand or against the dollar. It was trading around 131 24 hours ago so seeing significant weakness is a dual force effect here there's dollar strength apparent with a lot of the yield moving and rate expectations on the US side. The equally we've had retail sales come out of the UK this morning dropped more than expected UK consumer confidence sank for a fifth straight month. Economists in a regular Bloomberg survey say they now put the chance of a UK recession in the coming year at 30%. That's the highest it's been since early 2021 so that's the kind of the overall theme here is that rates are rising. And the markets certainly from yesterday's reaction to power getting a little bit more serious and hardening that kind of rhetoric. We saw tech stocks get hit quite aggressively yesterday. In particular stocks in general came under pressure as the dollar surged and then taking this to the political and geopolitical space France Macron. I'm going to say this, Macron looks set to win the election on Sunday. That follows the live TV debate we had midweek the general snap poll outcome was that again, much like he did in 2017 came out slightly stronger. The overall volatility bonds credit markets aren't showing particularly high degrees of stress at the moment. One thing I would say then is, although this looks like it should be fairly smooth by function of what I've just said means if there is a shock. It's going to be pretty forceful in the initial reopening of markets on Sunday night so that would be at least a knee jerk reaction. Euro weakness European equity weakness particularly in the French market, but also the peripheral bond market people would look at, namely things like the Italian yields and the subsequent spreads and so on. Yeah, the only way it's going to happen. The only way the pen can win is if the complacency amongst the Macron supporters is so extreme that just a whole big portion of them just don't bother turning out, which isn't the care France are pretty good in terms of turnouts and getting out there and actually voting so it's just these macrons are shooing isn't he. So it's done I think. Well, we weren't going to leave the EU either so. So, one thing just for you move on on Europe and rates, because that's quite a big, well, I guess it's a hawkish pivot from the ECB. And obviously we were quite used to central bank hawkish pivots these days given what's happened with the Fed and the Bank of England and all the rest of them. But I think the timing of it's interesting because if you look at, we don't often talk about currencies, excuse me we don't talk about FX and exchange rates much. But if you look at the euro against the dollar, then I mean that things down over 10%, it's down 10.7% this year. The euro weakening ends the dollar in the world's biggest currency pair that's a massive move in a pretty short space of time, you know driven by this monetary policy divergence where you've got a super hawkish US central bank leading to dollar strength and the ECB remaining a bit more new one not a bit remaining neutral on the fence until now. We've seen this euro weakness dollar strength, but one thing to note is the 2020 low for euro dollar is that 10650 roughly. And more than that the large the big lows we had in the eurozone debt crisis is down around 105. So the currency exchange rates 108 on the on the nail right now as I speak 10810650 and 105. It's very very key, really key very long term kind of technical levels and I think the ECB are a bit mindful that these are approaching because you know if you get a move below certainly below the sort of 2014-20-2015-2016 kind of triple bottom you may well see an acceleration to parity. And then this is where you know the currency, then the euro weakness is so accelerated that it's just going to exacerbate the inflation problem that obviously everyone's so panicked about so I think I think the exchange rate is one of the reasons the ECB have just decided you know what let's you know let's probably just tweak up the dial on the hawkish front. And for those not aware of it that's not uncommon right the ECB comparative to other central banks specifically when it comes to currency are quite vocal and have been as a historical precedent so why would that be they have been vocal although their official stance is that their mandate is not to hold the exchange rate of course although clearly that's what they're doing. They're more a bit more sensitive to it just because well certainly Germany who's the obviously the biggest and the powerhouse economy in the eurozone. I mean, unusual as an economy in that it's quite geared towards exports unusual for a large developed economy, right. If you think about the US or the UK about, I think it's a roughly very roughly about 80, about 15% GDP is exports. In Germany it's more like 40% of GDP is exports so for Germany actually a cheap currency can work in their favor, but flip it onto the other side look if you're a developed nation you're importing like all the other countries in the eurozone you're importing huge amount of your goods that consumers pay for buying shops right and if your currency devalues then these goods that you're buying from abroad become more expensive. And so that price rise then feeds into inflation. Obviously we've already got a big inflation problem. So I guess the ECB are worried that if this continued accelerated devaluation of the euro continues and it's just going to have a negative feedback loop into what is already a big problem on the inflation front. But the talking of currencies there is one specific currency which is heading for its worst weekly drop since the pandemic began. Yes. I think you are. Yeah. The Chinese remedy is is actually heading for its worst weekly drop, going all the way back to when the pandemic took hold deterioration and economic outlook there's also the COVID situation. They're still tackling at the moment. And of course as we mentioned rising US yields and the dollar strength that we're seeing imparting further pressure on the currency so yeah, as we've kind of always had simmering in the background it builds on this channel. China continues to just be a little bit of a going concern. Well, not yet and that little bit. I think that's a big understatement. I think I think it's, it's a concern that is not getting priced properly into markets at this point. Again, I was just talking to show who runs our China office. I was talking to him this morning. He's still stuck in our office in China is in Shanghai, which is obviously one of the key big cities that's in full total lockdown at the moment. And he's actually in Beijing at the moment he wasn't in Shanghai when the lockdown happened. And now he's just hanging out in Beijing, because apparently the kind of morale in Shanghai is just has been destroyed people are. So, like to the point where expats are just leaving now, like permanently looking to now leave Shanghai, they're worried that I was just talking to him about stuff that we've gone in China in the summer like June and July, and people in Shanghai just thinking that there's going to still be a lockdown by then there's no there's no visibility on when this ends and they're locked out China lockdown is proper lockdown, right, not allowed out of the building lockdown. It's not like the lockdowns we have in Europe where I guess fine go for a walk in the park once a day whatever not like that. So, you know, I think the medium to long term damage being done, huge, and an economically, I just, yeah, I, well, we've been pretty vocal about our opinions on China's handling of this but yeah, I think the COVID situation in China right now is the worst it's going to be, not this I'm not talking let's let's say cases and deaths are more more in terms of the nation and their mood around what's happening, and how the government's clamping down on everything and it's the, it's the way the lockdown has been implemented and the way it's been policed that morale is a record low, basically. And then linking to China, Russia, test fired a new intercontinental ballistic missile as you do in what Putin said, it will give the US and allies a little something to chew over. That's pretty much of a basic quote from Putin that not not unusual I guess the flexing of military muscle but obviously context is right in the middle of this ongoing Ukraine situation, but the connection to China, which I thought was interesting that no one really talks about is the fact that it comes as China has said also this week will continue strengthening strategic ties with Russia. Which I know we talked about many times, but just given what's going on, and the type of maneuvers Russia's been pulling, because China kind of moved a little more to the west I'd say, a few months ago, but now kind of reverting back to type to a certain extent So, then the final thing to lead us into Twitter is Tesla, but in a record profit. Just to throw it in our faces, again, revenue growth was driven in part by an increase in the number of cars Tesla delivered, increasing average sales prices shares spiked 10%. And on the recommencement of trade on Thursday, however, they did pretty much reverse most, if not all of that came by the close so when we start talking about a trillion dollar company popping 10%. That's pretty normal standard business day for Tesla shares but then of course that leads us into Elon Musk. So, Twitter, I was kind of thinking prepping up for this. Where do you even begin with this it's just so messy to a certain extent so I thought, going at it from a chronological order makes the most sense so he started accumulating his state. He had a 42% stake in Twitter to become the platform's biggest shareholder he was offered a board seat. He originally agreed to abide by several rules set out by Twitter when he joined the board, including not increasing his stake in the company past 14.9% of shares internally at Twitter. I think it was particularly popular when when the news emerged to put it lightly, he then flipped declined the board seat, and then has made a hostile bid for Twitter with the value valuation of the company at around 43.4 billion. So, I guess, let's start at going hostile before we then talk about self defense if you're Twitter and poison pills, and then we'll take it from there. Yeah, I mean it's such such I love these stories. This is such a great saga. We haven't had one for a while like this. I guess, in fact, have we had one like this and it feels like quite a unique kind of situation but yeah going hostile I mean, it's just simply trying to buy a company without the permission if you like or without having the board of directors who manage and run that company without having their backing to do so. So you're just going hostile against those that control and run the company. So several months ago Twitter is not looking to sell itself. It's not looking for a new stakeholder. He starts accumulating on the sly it then emerges when he does it was at 13D or one of these filings comes out comes to like bang he's got 10% of the company pretty much. Then, then what happens next then so Twitter now goes into defensive mode. I mean it's a bit odd isn't it because he filed that 13D, which is you only file if we talked about this I think last time but he filed it late. It was like 11 days late or whatever but you file that if you don't have an intention to take over the company. So then it was like filing that and then right yeah, there's a board seat you know I'm, you know, large shelled and then I think I don't know what happened behind closed doors on that discussion on right here's a board seat Elon do you want it. And I think probably what happened was well look, here are the restrictions that you need to agree to if you want that seat and musk when actually you know what I want to buy this whole thing so I can't sit on the board because I'll have to agree to not purchase more than a 15% Then he stepped back then he filed this 13G I think it is which is a separate filing which then expresses your intention to look to acquire the whole company. Then it's like the board are obviously clear now that what musk's intentions are to buy the whole lot and then they go into emergency defense mode, and they trigger the poison pill. She's got to be one of the best named corporate actions out there. So what is this, you know, I just think of like Rambo and Arnie when I hear that type of thing so what's this got to do with like a corporation. The extreme model the most extreme sort of defense mechanisms that a board of directors can put in place to block someone buying a majority stake or buying, you know the whole company so what happens here with this particular one with with Twitter. See what happens is they've geared it so that if musk buys shares in excess of 15% ownership and for every share that musk buys a new share gets issued. So that new share is then purchasable at a discount by other shareholders, other than musk. So musk is the only share would be the only shareholder that's not allowed to buy the newly issued shares. Other shareholders can purchase this newly issued discounted value share only unless they themselves another shareholder then accumulates ownership above 15%. So it's very basically anybody above 15% can't buy these newly issued shares the point about these newly issued shares is then diluting the, the value, and indeed then the actual proportional ownership of existing shareholders. Right so it just makes the, for my I don't know let's simplify it let's say there's, let's say there's 100 Twitter shares. Let's say let's say musk buys owns 15 of them right so he's got 15% if he buys the 16th right then a new share is issued so there's not then then musk owns 16 shares out of 101 shares in issuance right. There's another one he'll own 17 shares when there's 102 in issuance and so it dilutes his value and prevents him from basically or prevents him or makes the, oh yeah prevents him in this case but in other cases where there isn't a mechanism that prevents the person from buying the newly issued shares it's way more expensive, because you have to not only you're buying the existing shares you're having to hoover up and buy all these newly issued ones as well. And it, you know, makes the actual in the end the price that you have to pay. Is there a, is there a set marker for the discount that the existing shareholders would get. I mean how severe is the discount is it like 99% or is it, I have not been able to find that information. Because so they're going to make it as easy as possible right as to that they can buy as the biggest discount. Yes, but the more the discount the that this is a this is a dangerous strategy from the board's point of view, because it dilutes the share ownership of all shareholders. Including Musk, and obviously their intention is to dilute Musk but they're diluting themselves as well, although they can buy these newly issued shares but not everyone's going to be able to buy. Right, or would want to buy right so you are going to negatively impact existing shareholders outside of just Musk. And by the way, this is called there are different variations of a poison pill. This is a what's called a flip in poison pill, which is the most common, which is where the hostile, the person who's, you know, leading the hostile takeover that one entity is not able to buy the newly issued shares but all other shareholders can. That's a flip in version of a poison pill. So what what would be other. Is there any precedents for a poison pill being successful as a strategy. Yeah, there are I mean the poison pill thing. It kind of first it came to the first example of it was in the 1980s, actually, but it's not common, but it has happened. And actually happened with companies that you'll all have heard of so actually a really good example is Netflix. So Netflix use the poison pill strategy in 2012 Carl I can, who is a very famous activist investor started building up a stake in Netflix in 2012 we got to a 9.98% stake. And then the next flip board said look, we need to we need to block this. And so they went ahead with the poison pill strategy, which triggered if I can bought shares in excess of 10% of the company. It worked. I can backed off. Okay, because he bought, I think he bought a $320 million stake for his 10%. Okay, they wanted to buy the company he thought Netflix was ripe to be taken over by one of the big tech giants. So we thought right I'm going to buy it and I'll flip it to one of the tech giants. Okay, the board was successful in their poison pill strategy in 2013. Sorry, in 2015 I can then sold his 10% stake. He did pretty well because he bought it for 320 million and he sold it for 1.9 billion. So he did all right in the end, even though his attempt to buy and acquire the whole company failed because with a successful poison pill defense strategy so. And it has, you know, Papa John's the pizza lot they did it to block one of their founders from trying to take over the whole company to look it happens. And it can be successful, but it's quite high risk. So then, moving the story along we've now got to the point where Musk has put out a whole series of very classic Elon cryptic tweets, kind of inferring that he's going to make a tender offer. So, let's talk about a tender offer and the financing side of what he's been doing a tender offer is you just go to the shareholders. I mean, ultimately, who owns the company, it's the shareholders that own the company, right, who controls the day to day running of it, well fine it's the board of directors. Okay, now sometimes you'll have this standoff where the board of directors don't want Musk wheeling in here and taking over, but it could be that the shareholders think differently. I mean, are Twitter shareholders happy with their management? Are they happy with their board of directors? Tell me that then. I mean, what's the kind of general view on Twitter and how it has performed as a company? Well, yeah, I mean I would say it's, well, I would say and lots of people might say that it's performed really badly and it hasn't ever got anywhere near to fulfilling its potential. You know, one of the co-founders Jack Dorsey, who's on the board and still actively running the business, he runs other stuff, you know, it's not the only company he's got. And I think a lot of people think that he's just been distracted by his other stuff and he's not really invested. And the other big criticism of the board, Twitter's board right now, hardly any of them use Twitter and hardly any of them own Twitter shares. You could argue that Musk obviously is the opposite, right? He is a prolific user of Twitter. He's got 80 million followers and now owns 10%. So who's a better representation on the board and to run this company? You could argue it's someone who uses the product all the time and is invested in the business and its success. That's something, but a really good, has Twitter performed well? Yes or no from an investor's point of view. Probably the best measure I could give you is that Twitter was founded in 2006, two years after Facebook, right? Facebook was founded in 2004. Since 2006 to today, Twitter's share price has gone up 77%. So that's a share price bearing mind that Facebook's share price has also been hammered over the last sort of six months. Even with that, the Facebook share price is up four times more than Twitter's share price. So that right there shows you that Twitter never really delivered. And look, there's so many, I guess, revenue streams that have been untapped, perhaps, you know, with regards to maybe looking at subscription kind of based things. Look, perhaps we need to talk about the whole, to talk about can Twitter fulfill its potential or not? I think you've got to talk about, well, what is it and what is it for? This perhaps plays into why Musk wants to do what he looks like he wants to do to take it over and that's kind of comes back down to this, comes down to free speech. Okay. Musk is a huge proponent of free speech. He went as far and I'm going to quote, he said something yesterday, civilization risk. A huge risk, by the way, I love it, but literally a risk to the whole of civilization. He said civilization risk is decreased. The more we can increase the trust in Twitter as a public platform. Freedom of speech. And the problem we've got at the moment is the freedom of speech is progressively being more controlled by a handful of people who run big tech. Okay, this is the fundamental issue here. You've got a handful of people unelected that don't represent the people, yet they control the narrative. This then controls how people think and how they behave and how economies function and XYZ, right? We're talking about big, big things here. And Musk is fed up with people getting canceled and I guess it comes back to people like Trump. Yep, I was going to say, when's he when's he getting his reinstatement of his Twitter account then. Right. And I guess, I guess the point is about people who believe in free speech, it's like everyone should be able to say what they want to say and put forward their view. If you don't like it, don't follow them. Don't listen. It shouldn't be, hang on, if you don't like it, cancel them so that no one anywhere can hear them. So it's about that free speech thing. But the problem with Twitter, I guess there's so much content from every and it's a lot. It's a platform people just use to go on and rant about stuff and there's so much crap on Twitter. Let's be honest, right. So you need some kind of filter and something that Twitter, a revenue stream they've never explored is maybe going a bit more open source and this is something that in terms of the algorithms that are used to kind of control content. And I think one thing Musk wants to do is go a bit more open source on developing of these algorithms and then to the point where you as a user can maybe subscribe to a certain filter. I don't know, maybe, I don't know, let's say you're interested in tech stocks, right, and you want to use Twitter to be knowledgeable about stuff that's going on in the tech industry. So you could perhaps subscribe to a one particular algorithm that kind of filters for news on that front and you pay a small subscription for it, right. So I'm sure people would pay to get rid of all the crap that they're not interested in. But when I say crap. I mean one man's crap is another man's, you know, golden nugget content right so, and this is the point is freedom of speech. Say what you want. And it's up to you, the people if you want to listen to it or not. So, I think that's the kind of cornerstone of musks motivation here, I believe. So then we talked about, and I'm kind of jumping to different things here but we talked about what the gazillionaires do to get their kicks. We saw Bezos moving into media by buying Washington Post is this the kind of musk equivalent. So what is this is, what is his intention is it for getting kicks and he's got nothing better to do, or is it, you know, a genuine push to, you know, influence free speech globally, or finally is it actually he believes this company is undervalued. Does he believe there's some huge great extra additional revenue potential and can he take this company and 10 exit in the next decade. Fourth angle. Is this all just completely curated narrative so that he can engineer an exit of his setup with Tesla. And so he needs to follow this, this chain of thought, and all of this, you know, he's a smart guy. So he's probably thinking at least several chess moves ahead. He's well beyond this deal success no no success. There's, is there another element here where I for one do not understand or know deep enough, how he's structuring his exit out of companies like Tesla, and whether this is playing into that somehow in order to, you know, tax and all the rest of it options, explorations or exercising and trying to facilitate that. And actually he's just, he's a guy who just wants to make a lot of money and this is just the narrative to to execute. Yeah, I think you're definitely right. I think there's an angle. I mean we've been talking about musks big problem with his, his wealth as a person. Well, it's locked up in that problem. Yeah, so how do you, how do you liquidate that wealth, right, and we've been talking about this for months and months and months and months about how well hang on if Elon starts selling Tesla shares without the signal that this is this is the top. So everyone else says and the share price collapses and obviously his wealth collapses with it but I think this is probably another strategy. You know, along the lines of engineering and exit from Twitter because we've got to talk about financing right because this deal with Twitter has taken another step towards potentially happening on the musk side because he's now come up with the financing. That's all very well and good saying, here's my tender offer, you know, I'm good I want to buy all you shareholds out there I want to buy your shares for what was what was it $54 20 isn't it I think per share adding up to then a 46.5 billion valuation. That's all very well and good saying that but, but 46.5 billion dollars is a lot of money and where you're going to get it from. So the next exercise musk has been working on over the last week is structuring the financing of this potential deal. And part, you know, part I mean the financing is going to involve. So we believe term loans credit facilities cured bridge loans unsecured bridge loans margin loans. And then something you probably will understand better cash cash making up about 40% of the kind of deal. But in terms of the, the kind of numbers hang on a minute, I got the kind of breakdown here if I can just find it so yeah. So he's been talking to lenders musk has and so Bank of America Barclays and the like are apparently are now going to structure some of this and so he's so six and a half billion dollar term loan, a three billion secured bridge loan, $500 million revolving facility margin, yeah, the biggest portion or one of the biggest portions is a 12 and a half billion margin loans secured by musk Tesla shares. So obviously with loans, you need collateral, usually to kind of underpin that loan if you think about a house and a mortgage is probably the best example right your collateral is the house the building and then you're borrowing money against that. So musk is going to put up some of his Twitter, sorry, Tesla shares as collateral. But he's already used a big chunk of his Tesla shares for collateral for loans in the past so there's a bit of. Two different figures as to how many shares he's actually putting up here as a loan and then there's cash right. And so we're talking 21 billion maybe in cash and they're what we believe he's going to have to generate that by selling some of his Tesla shares so here's a great excuse. I'm not selling my Tesla shares, because I don't believe in Tesla, and it's growth story anymore. I'm selling Tesla says purely because I need to buy Twitter for the greater good of mankind and civilization. Now you're talking my turkey now. Right. It's just, if you step back and just it is genius. How long has he been towing the freedom of speech line a long time. Yeah. So he's been engineering this. This is my view for a long, but he's again, he's an incredibly smart guy and to think that this is all randomness. I think this is just his exit strategy, but he started a decade ago. Because he knows. He knows. The big giants in the automotive world are coming. And so it's time to move this up a gear or two. Well, I certainly agree on the Tesla. Yeah, I think this is very top for Tesla in terms of share price. So if he can exit now, I think it'd be genius and this would be a really interesting genius way of finding the excuse to engineer a major exit. The other thing then, of course, is because he's kind of structured the financing now, this obviously makes his bid much more serious, tangible. And that's good from the shareholders point of view. So can he now say to the shareholders, look, you know, this poison pill thing from the board, essentially, no one ever really then goes ahead and tries to buy the company and absorbs this huge extra cost that all these newly issued shares take. So what tends to happen with the poison pill deal is that it forces the hostile takeover person to start to have a dialogue with the board about how we can make a deal work here. If the hostile person has the backing of the shareholders, well, this puts the board in an incredibly difficult situation. And at the annual general meeting, which is actually in May, I think it's towards the end of May. If the sharehold, if there's a shareholder revolt, then you don't allow the board to get, I think there's two people on the board that are up for reelection and they won't be reelected. And then you might get new people that are pro musk deal on the board. So you could play this game of really essentially forcing the board via the shareholder support via these votes at the annual general meeting. And the second thing is, once the financing structures in place, he can then start to talk about maybe bringing on board some partners. Right, so explain to me this part, where does the private equity angle start to come into this? Yeah, so essentially he needs to come up with $45 billion, right? And he's proven, I guess, on paper that he can do it himself. There's a huge risk, even for a man of his wealth. You know, that's a lot of money, right? So what I'm sure he'll prefer to do is bring other people into this so that he doesn't have to stump up this cash all by himself. And so you're starting to get some private equity interest. There's a software buyout group called Toma Bravo, who are thought to be kind of at the front of the queue here. They've got about $100 billion in assets and they've begun conversations with Musk. So they might take on some of a portion of this money, a portion of the $46 billion, they might kind of come in on some of it. It might be on the debt side of it, maybe it's on the cash side of the deal. So I think that would make sense, I would say. And again, that might be a positive from the shareholder's point of view as well if it's not just Musk, the dictator coming in and just doing what the hell he wants. So I think that will probably be the next move as well. And then the other kind of, I guess, alternative would be finding a white knight. So perhaps we could explain what that is and why in this instance is probably unlikely. Yeah, so a white knight is something the board should be working on right now, which is finding an alternative buyer at a favorable price. Now why this might be difficult, because you could say, well, surely the likes of, I don't know, Apple or Amazon, you know, or Google, surely, surely a massive social media platform like this could be a great bolt on to their businesses. But the problem is, the regulator won't allow it. So the regulator would definitely not allow one of the big tech giants to buy Twitter. So cut right there. And because it's such a huge deal, you're going to need north of 45 billion right to have a better offer than Musk's. This is a lot of money. So yeah, the big tech giants can afford that but they won't be able to do it because the regulator so I think this is a situation where finding a white knight that can come up with that kind of capital. I guess who would want to, by the way, I think it's going to be difficult. Well, let's end it there. I think we could go on and on with this particular topic but hopefully that addresses a number of the questions I think came in to my inbox over the last two weeks and yeah thanks for buzzing me over the Easter holiday. As pierce was saying it's just wanted to conclude with that I think it's amazing that people are listening to this podcast still after 62 episodes I think we're on now so a lot of hours of content but as pierce said I actually spoke to a student who runs the main society in Oxford University, which is kindly invited me to go and speak at in the coming weeks, and he said everyone listens to the podcast and follows the market maker newsletter that accompanies the podcast as well so yeah don't forget to check out that newsletter for any interest in just building out your commercial awareness but equipping yourself is staying on top of the news what you need to know with career tips and hacks and so forth as well we share lots of stuff on a daily basis. I'll drop the link into the the bio of this episode but that's it for this week pierce thanks as ever, and yeah take care everyone have a great weekend. Cheers guys.