All That and a Bag of Mail: Elon Musk Tries To Buy Twitter Edition

It's Good Friday and I hope all of you have fantastic Easter weekends.

I'm going to be heading down to Birmingham tomorrow for the debut of the USFL and I'm going to take the boys to see the new Harry Potter movie tonight. Then Easter on Sunday, which, by the way, the Easter Bunny has made a wild rise, at least in my house, over the past couple of years. The Easter Bunny is now a mini-Santa in the Travis household.

My seven year old asked me this morning if there was an app to track the Easter Bunny like there's an app to track Santa.

It's also possible this is only happening in my house and my boys have realized that the best way to get a great Easter basket is by going all in on the Easter Bunny.

Anyway, on to your questions.

I'm synthesizing this one because it's the question I've gotten the most from everyone, what happens with Elon Musk and Twitter?

First, you can watch a half hour discussion of this issue on yesterday's Outkick the Show. I'd encourage you to do so because I think the discussion is pretty good here.

And here is yesterday's interview on Sean Hannity's show with Congressman Jim Jordan, who knows these big tech issues really well.

There are essentially three options at play here:

a. Elon buys Twitter
b. A second bidder buys Twitter.
c. Twitter stays independent and rejects the offer from Elon.

Personally, I think options one and two are the most likely because option three would lead to a tanking stock price and abundant shareholder lawsuits.

So I think unless Twitter finds a second bidder they are in a tough spot. Elon has painted them into a corner with his offer, but I also think it's clear Twitter's board -- and the employees -- don't want to sell the company to Elon. So what's happening right now is the board is scrambling to find a second bidder. Which means the biggest question right now is this: is there a second bidder? And, significantly, could that second bidder pass merger and acquisitions muster? (That is, I doubt Facebook or Apple or Google, for instance, would be allowed to buy Twitter. So it's not just there being a second bidder, it's a second bidder the board believes could get a deal over the finish line.)

That's why Twitter's best option might be for another super rich individual -- a Jeff Bezos for instance -- to decide to make his own offer for Twitter. Will it happen? I'm skeptical just because there honestly aren't that many people who could afford to put up over 40 billion for Twitter. Not to mention, while Elon Musk says his offer is his final offer, he could certainly afford to raise his bid if necessary considering he's worth around $300 billion. (Ironically Bezos's divorce might preclude him from being able to purchase Twitter, since he lost tens of billions in assets in that settlement with his ex-wife.)

So unless there's a bona fide second bidder, I believe it's going to be hard for Twitter's board to say no to this offer without creating a ton of lawsuits relating to a breach of fiduciary duty.

Why would shareholders have breach of fiduciary duty claims against Twitter?

Because right now the Twitter stock price is $45 and Elon has offered $54.20. That's a premium of roughly 20% for all shareholders if the board accepted Elon's offer. I'm a Twitter shareholder and I'd vote to accept this offer with my shares if I were given the opportunity to do so. I suspect the majority of Twitter shareholders would likely vote the same as me and take the premium price as well as Elon's all cash offer. So if there is no second bidder and the Twitter board rejects Elon's offer -- and Elon doesn't come back and make a second offer -- then the stock price would likely drop by seven or eight points, back to the high 30's at best. Sure, the stock could eventually come back, but that's a monster liability for Twitter's board. The gap between a $54.20 offer and a $37 or $38 stock price, at best, would be tough to justify.

Now the Twitter board could reject the bid and cite the argument -- likely provided by their investment bank advisors -- that they believe Musk's offer undervalues the company, but absent any other offers and given the likelihood that the stock price would tumble if they reject his offer, this feels like a dangerous spot for the Twitter board.

How can you argue Musk's offer isn't high enough when no one else will pay more?

And if Twitter's board rejects Musk's offer there's always the possibility he decides to pursue a proxy battle, where he attempts to buy up the shares of Twitter shareholders for his offer price. Could he get to over half of the company then? That would largely depend on what the largest stakeholders, the equity funds, decide to do. My bet is most of these large equity holders, particularly in light of the difficult stock market so far this year, would love to juice their returns with a guaranteed buyout of Twitter, especially considering that positive return for their shareholders could turn significantly negative if they don't get the purchase they want.

That is, given the large equity holders are judged by their returns -- and that most stock funds are down this year -- do they really want to turn down a guaranteed 20% price premium for a potential 20% price decline? Sure, this loss would be on paper, but they are judged by paper profits and losses. I think most of them would take the money.

Final thought on analyzing this situation, the stock price declined on Thursday. That suggests Wall Street is betting there isn't a second bidder and also that the Twitter board may reject the offer.

So buckle up.

In terms of the impact on Twitter itself, I believe Musk's acquisition needs to happen. Musk would be an important voice for free speech and the marketplace of ideas. We need that given that Twitter has increasingly become biased against anything other than far left wing speech.

It's telling that the left wing blue check mark brigade is so terrified of the idea of everyone being able to share their opinions on an even playing field. Isn't allowing as many people as possible to share their opinions the actual lifeblood of democracy itself?

And, goodness, look at this piece from the Washington Post.

It's truly crazy how much different Musk's ambitions are being treated compared to virtually every other billionaires ownership of major media companies.

Billy writes:

"Will Biden finish out the next 2 years?"

I think he will, yes.

What I expect to happen with Joe Biden is that after a massive shellacking in the November mid-terms, I think by February or March of 2023 Biden will announce he's not running for re-election and cite his age and health as the reason why. This would make Biden the first sitting president who is eligible for re-election not to run since Lyndon Johnson in 1968.

That will set off a stampede of Democrats running to achieve the 2024 nomination.

Which I'll address below.

If, however, Biden runs again in 2024 -- and if he actually makes it to November of 2024 -- I think Biden will get absolutely destroyed at the ballot box by Trump, who I expect to be the Republican nominee in 2024. Biden would be 82 years old at that point and would be in office until he's 86 years old.

I just don't think there's any way possible people would vote for him.

But I think that would be a moot question because I don't think he's running again.

Festus writes:

"How do the Dems get away from Kamala Harris in 2024? Assuming that Biden will not run, do they have him step down after the midterms, let her take the 2023 recession on the chin, and hand the 2024 election over to Gavin Newsom to battle Desantis? Or do they just let her get blown out by Desantis?"

Kamala's entire 2024 argument, which will be fun to watch, will be that as the sitting vice-president she deserves the nomination because it would be racist and sexist not to pick her. And based on the entire Democratic platform, which is basically now to call everyone racist and sexist, she'd be right.

But she's such an awful candidate and has done such an awful job as vice president -- she has a 35% approval rating right now in her home state of California, CALIFORNIA! -- that I think Democrats will kick her to the curb.

That's also why I don't think Biden will step down and allow Kamala Harris to be elevated to office because I don't think Democrats want her to be the nominee in 2024. I think they realize she'd be a disaster and they don't want to give her a head start.

Now it's also possible Biden's health deteriorates to such an extent that he's truly not able to stay in office -- isn't it incredible how often the 25th amendment was mentioned regarding Trump and how it's almost never mentioned for Biden despite Biden being in far worse shape? -- but I don't think the Democrats want Kamala in 2024 and they don't want to give her a head start either so that's why I don't expect her in office.

(One caveat here, Biden could make a play for his historic legacy, even if the Democratic party was furious at him, by stepping down and letting her be elevated to president while throwing his entire support behind her in 2024 and arguing it's past time for America to have a minority woman in the highest office in the land. That's essentially the same argument he made in elevating KBJ to the Supreme Court. But I don't think Biden will make that move because, frankly, I think he doesn't want to validate his critics who have said he isn't healthy enough to finish a term in office. But that would make it much harder to beat Kamala because then she'd be running for the nomination as the sitting president.)

On the Republican side, Donald Trump is going to run in 2024. That means most of the top Republican candidates will sit out this cycle because they don't think they can beat him. (People with nothing to lose like Chris Christie and Liz Cheney, who I think will run and then try to run as a third party to cost Trump the election, will run. But I think most of the top candidates will sit out.) The one top candidate who I think may run against Trump is Florida governor Ron Desantis, however.

Why? (And, by the way, this is 100% my opinion on Desantis. He hasn't said anything about running in 2024 to me or anyone else, he's just refused to rule it out, at least publicly.)

Because Desantis, due to the 12th amendment, can't be Trump's vice president if both men live in Florida. (The president and vice president can't reside in the same state and get the electoral votes of that state. So Florida's electoral votes wouldn't go to the Republican nominee if both men were running from Florida, meaning the Republicans couldn't win the White House. Sure, you could cure this by having Trump relocate to another state, Desantis would be governor so he couldn't move elsewhere, but do you really think another state would make it easy for Trump to establish residency there? And can you imagine the lawsuits this would create? I just don't think it's a risk worth taking.)

So if Desantis isn't a viable vice president for Trump then his options are to sit out the 2024 election cycle and run in 2028 or to run in 2024 and take on Trump. But in 2028 Desantis wouldn't be governor of Florida any more. So he'd be running without an office. Maybe that doesn't matter, but it's a factor. Plus, and I think this is more significant, covid is unlikely to be a big issue any longer by 2028 and Desantis's signature issue his response to covid. Will people still care about Desantis's covid response in 2028? Nowhere near as much.

So if Desantis gets, essentially, a head to head vs. Trump in 2024, why wouldn't Desantis roll the dice and see if he can pull off the upset? Sure, Trump would be the favorite -- and I think Trump would win the nomination -- but Desantis, even in a loss, might make himself the favorite in 2028. (Trump's vice president pick would be the other favorite in 2028). The risk here for Desantis is you alienate the Trump MAGA base by running against him in 2024, but then you have to balance that out by Desantis being able to argue he wasn't afraid to challenge Trump, which I think many would respect.

What's Desantis's best argument in a 2024 race against Trump? That unlike Trump he can serve for eight years and that, just maybe, some people who hate Trump would be willing to vote for Desantis. Would that pitch work? I don't know. But if Desantis runs in 2028 he's going to have twenty opponents, if he runs in 2024, he'll have one. That's hard to pass up.

But if I'm right and Biden steps down then the Democratic primary would be even crazier, twenty people might run for office.

Ultimately I think we'd end up, wait for it, with Trump vs. Hillary again in 2024.

Yes, I think Hillary would emerge as the Democratic nominee in 2024 and reprise the 2016 race against Trump.

And I think Trump would win fairly decisively against her in 2024.

So that's my really detailed Nostradamus prediction here.

Then we have a total free for all in both parties with no incumbent president for the 2028 race.


Paulie writes:


"Age limits and term limits for politicians, examples California Senator Diane Feinstein and President Biden?"

The Constitution requires you to be 35 to be elected president. I wish it also said you couldn't be over 65 to be elected president the first time. I know that would cut out some very qualified senior citizens, but, personally, an age range of 35 to 65 for president would make sense to me.

I mean, you can't fly an airplane for a major airline if you're a senior citizen. That's because your cognitive ability declines as you age. Not for everyone at the same rate, but for everyone, eventually. So we won't let you fly a plane, but we will let you run the entire country? That makes no sense to me.

As for term limits, I think they make sense in theory, but we kind of have them already, they're called elections. If the people think someone is doing a poor job they can vote them out.

I do think it's interesting, however, that we have term limits for governors and presidents but not for Congress. That's always felt like an intriguing decision to me. You can have a senator who serves for forty or fifty years, in theory, but a president only gets eight years.

That dichotomy doesn't really make sense to me.

But if I had to choose between term limits or upper end age limits, I'd go with preferring an upper end age limit for the presidency.

Darren writes:

"USFL fires up this weekend. Three years from now: It still exists? It’s a memory? Teams have been absorbed into the NFL?"

I'd bet the USFL will still exist in three years because I'm optimistic on the idea of spring football. I always have been. The XFL would have made it to its third year, I think, but for covid shutting everything down in 2020. Remember the XFL was actually doing pretty decent. That was just bad luck.

The USFL has good backing from Fox and NBC, will be well distributed, and I'm impressed by the organization's planning and detail. Ed Hartman at Fox, who was instrumental in Outkick being purchased by Fox, is basically running the league on Fox's behalf and I think he's done a whale of a job so far.

Remember this is a league that Fox owns itself. They've essentially created their own football league. So in the future, if they so desired, they could spin these franchises off to individual owners or heck they could take the league public or they could sell it all to someone else.

The best analogy I'd draw here is just like Endeavor owns the UFC, Fox owns the USFL. This isn't the NFL with 32 different individual owners. Fox owns the league and controls the game distribution through its networks. Honestly, it's brilliantly constructed.

So, yes, I think it will still be here in three years.

I do not, however, think it ever merges into the NFL, I think the USFL sees itself as a minor league with a good relationship with the NFL for years to come.

And, remember, the NFL is such a Godzilla in sports that if you can just get 10% of the viewership of NFL games then you would have a wildly successful football league. Given that you're competing with the NBA playoffs and Major League Baseball, I think there's an avenue here for this league to work.

...

Okay, I hope all of you have fantastic Easter weekends and thanks for the questions.