Six months of a very eventful acquisition… and turbulence that is not yet over. Elon Musk bought Twitter for $44 billion and took control of it on Friday, October 28. The Tesla and SpaceX boss immediately dissolved the board, fired the chief executive and other senior officials. Twitter will begin layoffs this Friday. According to the Washington Post, the new leader plans to lay off about 50% of the approximately 7,500 employees.
Elon Musk financed the transaction with his personal fortune, contributions from investment funds and other large fortunes, as well as bank loans that the blue bird company will have to repay. Among the shareholders in the capital of Twitter, one of them particularly attracts attention: that of the Saudi prince Al-Walid Bin Talal. According to a document submitted to the American market authority, the SEC, this 67-year-old businessman has become the second largest shareholder in the social network. The businessman, who had initially rejected Elon Musk’s offer, deeming it too low compared to the “intrinsic value of Twitter”, finally brought him the almost 35 million shares he already owned .
In the $ 44 billion deal that allowed the takeover of Twitter, the approximately 35 million shares held jointly, and brought to Elon Musk, by Al-Walid Bin Talal himself and by his investment company Kingdom Holding Company (KHC) have indeed weighed for nearly 2 billion. As Liberation reminds us, the presence of Al-Walid Bin Talal among Twitter investors is not new: in 2011, this grandson of the founder of the Saudi kingdom had committed $300 million to Twitter (i.e. $229 million). euros at the time) and its weight has continued to grow, allowing it to become the number two shareholder in 2015.
Nicknamed the “Warren Buffett of the Middle East” by Time, Al-Walid Bin Talal is a regular in risky and high-profile bets, recalls Les Echos. Rescuer of the financial group Citicorp (the predecessor of Citigroup Inc), weighed down by bad debts in the 1990s, he saw his participation soar by more than 190% during the following decade, specifies the economic daily. At the time of the 2008 financial crisis, the Saudi prince increased his stake as the stock price plummeted. Today, Citigroup stock is trading at less than a tenth of its pre-crisis value.
Al-Walid Bin Talal has been reorienting Kingdom Holding’s portfolio for 20 years on tech and media with an entry into Snapchat in 2018 (2.3% of the capital for 250 million dollars). He also owns 18.7% in the Rotana group, present through television, radio, cinema and music throughout the Middle East, completes Les Echos.
The Saudi shareholding in the capital of Twitter worries Washington, while for Crown Prince Mohammed bin Salman, known as “MBS”, the monitoring of social networks “is a security imperative for his governance”, reminds Liberation David Rigoulet-Roze, researcher associated with the Institute of International and Strategic Relations (Iris). According to the Washington Post, the US Department of the Treasury has contacted Twitter to inquire about the company’s new governance, and in particular the details of sensitive information on the social network that will be accessible to major investors.
For six months, the HKC company has been 17% owned by Saudi Arabia’s sovereign wealth fund, headed by Crown Prince “MBS”. Relations between Al-Walid Bin Talal and “MBS” have, however, been complicated. This prince was one of some 300 personalities arrested and then locked up in the Ritz-Carlton hotel in Riyadh during a wave of anti-corruption crackdowns in November 2017 orchestrated by “MBS”. He was released three months later after making financial arrangements with the authorities. According to opponents of “MBS”, this wave of arrests was an attempt to ward off potential rivals to consolidate its power in the wealthy Gulf monarchy.
David Rigoulet-Roze notes that Al-Walid Bin Talal then “had to give up all forms of political influence in view of the future succession of the current King Salman”. He continues: “Mohammed bin Salman has agreed to give him back some economic leeway, because he also needs Prince Al-Walid bin Talal as a surety with potential investors, to carry out his famous ‘Vision 2030’ plan.” From now on, Al-Walid Bin Talal is one of the first supporters of the modernization reforms undertaken by Mohammed bin Salman.
