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Elon Musk’s Twitter Deal Poses the Multi-billion-dollar Question to Companies: Public v. Private?

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Elon Musk’s proposed $44 billion swoop on Twitter has highlighted a growing debate on the merits of companies staying or going private.

For now, the Tesla and SpaceX boss – and world’s richest man ($244 billion) – is said to have gone cool on taking over the social media platform.

Speculation here ranges from Musk recoiling from the pressure his eye-watering proposal is placing on Tesla’s stock, to claims that he aims to secure Twitter for much less than his original headline-grabbing offer.

Neither changes the fact that he vowed to take Twitter private if the deal goes ahead, prompting comment from progressive broker-dealer Rialto Markets, which is masterminding the rise of many successful high-growth companies who have no intention of ‘going public’.

Rialto Markets CEO and Co-founder Shari Noonan said: “Staying private delivers a flexibility that has been supercharged by crowdfunding from smaller investors and accredited investors who readily ‘buy in’ to a firm’s products or ethos, enabling company expansion free from potential constraints by big corporate shareholders or VCs and public scrutiny of their accounts and plans.

Noonan, who has just received the prestigious Instinet Positive Change Visionary Award at the 2022 Markets Choice Awards in New York, highlighted the electric vehicle company, ATLIS, which Rialto Markets helped to crowdfund $30 million during its crucial start-up phase.

It has also enabled crowdfunding for Digital Twin pioneer, Cityzenith, whose futuristic tech helps real estate owners and even whole cities cut their carbon emissions and running costs dramatically.

“In both cases, and typical of the new breed of companies liberated by the 2012 JOBS Act and its crowdfunding opportunities, ATLIS and Cityzenith have built investor communities who know they can offload their holdings for potential profit eventually, through a secondary market platform like our own ATS (automatic trading system).

“Public ownership puts other strong hands on the company in the form of major corporate investors, who must then be kept on board with the management’s business strategy.

“This isn’t always popular with visionary and entrepreneurial CEOs who want flexibility, particularly in the fast-moving tech sector.

“When Elon Musk announced his abortive plan to take Tesla private in 2018, he said this would enable it to be ‘free from as much distraction and short-term thinking as possible’.

“In Twitter’s case, he will see that the social platform went public in 2013 – for what then seemed a colossal $1.8 billion – but returned profits in 2018 and 2019 only.

“Though this makes his multi-billion dollar offer even more staggering, Musk must surely see greater profit potential for Twitter.

“The key stat is Twitter’s user base: less than 220 million, tiny against Facebook’s at around three billion or even TikTok’s one billion, but it must be argued that Twitter punches well above its weight in terms of influence so there is surely scope to boost numbers and, therefore, advertising revenues.

“All of which supports his intent to go private if his takeover succeeds: it means he doesn’t have a potentially powerful gang of shareholders who might slow his plans to change Twitter by say, insisting on an immediate drive for profitability when he prefers to play a longer game for greater rewards.”

Noonan added that it was not unusual for major public companies to go private, often to recover momentum away from alleged short-termism imposed by shareholders.

The computer giant, Dell went private from 2013-2018 to enable it to “be even more flexible and entrepreneurial” according to Founder Michael Dell, while the Hilton global hotel chain re-structured and expanded as a private company from 2007-2013.

Noonan added that private status also freed a company from the need to report its financial documents and other developments to the US Securities & Exchange Commission, which then become public information and available to scrutiny by competitors and other interested parties – perhaps would-be buyers, welcome or hostile.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Apple’s Market Value Plummets Amid Regulatory Scrutiny on Both Sides of Atlantic

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Apple Inc. finds itself at the center of regulatory storms on both sides of the Atlantic, leading to a significant dip in its market value.

The tech giant is facing intense scrutiny from regulators with allegations of antitrust violations looming large.

In the United States, the Department of Justice, along with 16 state attorneys general, has filed a lawsuit against Apple, accusing the company of breaching antitrust laws.

This legal action has sent shockwaves through the investment community, resulting in a 4.1% drop in Apple’s shares on Thursday alone.

This decline wiped out approximately $113 billion in market value, increasing its year-to-date losses to 11%.

Once hailed as the world’s most valuable firm, Apple’s shares have underperformed major indices like the Nasdaq 100 and the S&P 500 in 2024.

Across the pond, European regulators are also eyeing Apple’s practices closely. The company faces potential probes into its compliance with the region’s Digital Markets Act.

This legislation empowers authorities to levy hefty fines, up to 10% of a company’s total annual worldwide revenue, for violations.

With investigations looming, Apple’s future in the European market appears uncertain.

Despite Apple’s staunch defense against the allegations, investors remain jittery about the implications of regulatory actions.

The company’s legal battles have underscored broader concerns about its dominance in the digital marketplace and the impact on competition.

As the regulatory saga unfolds, Apple must navigate turbulent waters, balancing legal challenges with its commitment to innovation and market leadership.

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NNPC Gears Up for Public Listing, Embraces Full Commercialization

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The Nigerian National Petroleum Company Limited (NNPC) is poised for a transformation as it sets its sights on a public listing.

The announcement came from Mele Kyari, the Group Chief Executive Officer of NNPC, during his address at the ongoing 2024 CERAWEEK in Houston, United States.

Kyari affirmed NNPC’s commitment to aligning with the provisions of the Petroleum Industry Act (PIA), which mandates the company to become a quoted entity.

This move, he emphasized, is a pivotal step towards realizing the objectives outlined in the PIA, ensuring transparency, efficiency, and profitability in the Nigerian oil and gas sector.

In his remarks, Kyari highlighted the transformative journey NNPC has undergone, transitioning from a government-owned corporation to a commercially-oriented and profit-driven entity.

He emphasized that the company has evolved into a full limited liability company, capable of generating dividends for its shareholders while adhering to tax and royalty obligations.

Furthermore, Kyari underscored the strategic importance of NNPC to Nigeria’s resource management and economic development, emphasizing its pivotal role in the country’s energy sector.

The planned public listing of NNPC shares is anticipated to democratize ownership and enhance transparency within the company’s operations.

Kyari noted that the process is in line with the legal framework established by the PIA and is expected to commence within the stipulated timeline.

NNPC’s bold move towards commercialization signifies a paradigm shift in Nigeria’s oil and gas industry, promising increased accountability, efficiency, and value creation for stakeholders.

As the company embraces this new era, it aims to consolidate its position as a key player in the global energy landscape while driving sustainable growth and development domestically.

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