Judging Freedom - Twitter Board Should Honor their Financial Responsibilities

Episode Date: April 22, 2022

Musk says he has secured $46.5 bln in funding for Twitter bid https://www.reuters.com/technology/mu... #Musk #TwitterSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Hi, my friends. Judge Andrew Napolitano here for Judging Freedom. Today is Friday, April 22, 2022. It's about 145 in the afternoon. Before I get to Elon Musk's latest, which is quite interesting, a bit of a heads up. up two weeks ago when former United States Marine Corps officer and former UN weapons inspector Scott Ritter was on the show. 125,000 of you watched all or part of the interview. My deep and profound gratitude for an outpouring like that. That's a number that we've never achieved. And of course, many of you who had not liked and subscribed did so right after that interview. Well, Scott Ritter will be back with us this Tuesday, April 26th at one o'clock in the afternoon Eastern time. I hope we can break the 125,000 click or view, whatever you want to call it, record. And I hope many more of you will like and subscribe.

So today, Elon Musk told the Security and Exchange Commission that he does have $46.5 billion in cash available to acquire Twitter. Now, how he's going to acquire it, of course, is the next phase. And does he really have this is the question that people will ask. Since in the past, the SEC punished him severely when he attempted to buy something. I don't remember off the top of my head what it was. And he said financing secured, simple as that, in a tweet of all places. And it turned out he didn't have the financing. But let's say this is true. Let's say that he does have this $46.5 billion in cash sitting somewhere and he's prepared to use it. What does he do with it? Well, if the board of Twitter will not accept his offer and recommend to the shareholders that they accept it. He can then go to each individual shareholder with a

tender offer and say, I will offer you $75. I'm making the number up per share. They last traded at $65 per share. You'll have that $75 per share in your bank next week if you go for it and theoretically, if he acquired a majority share, a majority of shares, well, then he would own Twitter and he would oust the board and have his own board and have his own executives deciding what postings are appropriate and what postings are inappropriate. I'm in favor of him taking over Twitter. I want the job of being his chief content officer. I'm a libertarian who believes that the Constitution means what it says and that all innocuous speech is absolutely protected and should be put out into the marketplace.

And all speech is innocuous when there is time for more speech to rebut it. The remedy for hateful speech or harmful speech is not to silence the speaker. It's to let the speaker go and to challenge the speaker with more speech. Now, having said that, Musk has financial issues. How can a guy with 46 billion have financial issues? Well, here are the issues. The board has installed what's called a poison pill, which means as soon as he acquires 15% of the shares, everybody else who owns the shares can acquire a huge number on their own, not him, but everybody else at a discount, thereby making it mathematically impossible for him to acquire 50% plus one of the shares. At some point, a court might get involved. Okay, Judge Napolitano, how could a court get involved? Well, here's how. The board of directors of any publicly traded corporation has a fiduciary duty

to the shareholders, to the financial interest of the shareholders, not to their political interest. So if Twitter doesn't want to sell to Elon Musk because they hate his politics, if it's a good deal for the shareholders, the board is obliged to bless and approve that deal. And if it doesn't, and Eli Musk or some current shareholders more likely sue the board, I think they'll win. So there's only so far the board can go as he keeps upping and upping his offer. Pretty good. It will be too, pretty soon, it will be too good to refuse. And if the board continues to refuse it, they'll face, hopefully, a courageous federal judge who will do the right thing.

I'm not in favor of judges telling corporations how to run their businesses, but this is a matter of money. And if somebody wants to buy your shares and you want to sell them, you should be able to do it. That's the free market. And the board shouldn't be able to prevent you from doing so. Judge Napolitano. Scott Ritter next Tuesday, April 26th, one o'clock Eastern. Judge Napolitano judging freedom.