On Thursday, April 14th, Elon Musk announced an offer to buy Twitter for $54.20 a share.
This is a huge story with a lot of fast-moving parts to it. It’s also a story that will likely stretch out over the next few months, maybe even longer. So we thought we’d put together a guide for you, our readers, that can be updated as things continue to unfold. Because, like Elon, we ❤️ you.
So strap in — it’s going to be a bumpy ride.
The latest news:
Our resident Musk whisperer Elizabeth Lopatto breaks down the details found in the billionaire’s latest filing with the Securities and Exchange Commission, and concludes that they give his proposal a lot more weight. She also explores why he hasn’t been able to line up any other investors, and whether Twitter will be able to find its own buyer in order to scare off Musk.
Lastly, she games out what happens if Musk succeeds, namely a lot of Twitter employees quit and Musk makes a lot of changes, and maybe even reinstates Donald Trump to the platform. Good times!
Republicans are in a tizzy about Twitter’s attempts to thwart Musk’s tender offer. CNBC reports that House GOP members, lead by Rep. Jim Jordan (R-Ohio), are calling on the board to preserve all records of the transaction, potentially setting the ground for a future hearing if the party takes control of the House after the midterm elections.
If you’ll recall, Twitter is a favorite punching bag of conservatives who claims — largely without evidence — of censorship by the social media company.
The story so far:
A thousand years ago, on April 4th, 2022, Elon Musk announced that he had purchased 9.1 percent of Twitter. The news that the world’s richest man was now (briefly) the largest shareholder in his preferred social media platform sent the stock price soaring and many a keyboard a-typing.
Musk immediately set about soliciting suggestions about ways to improve Twitter by — what else — tweeting a poll. The company responded by offering him a board seat, a move that would have restricted him to owning just 15 percent of the company. At first, he said yes. Then he changed his mind and said no. Meanwhile, our resident Twitter and Musk experts, Casey Newton and Liz Lopatto, respectively, dug deeper into why Musk was flirting with Twitter and what the likely outcomes would be.
After declining a seat on Twitter’s board, Musk updated his filing with the Securities and Exchange Commission to indicate that he would not be a passive player in the company’s affairs. Gone was the language that he would restrict his holdings to just 14.0 percent of the company. In retrospect, this was the first clue that he may attempt something more impactful than just buying some stock of serving as a board member.
Platformer’s Casey Newton isn’t the only one who didn’t believe Musk would launch a hostile takeover of Twitter. After news broke that Musk had acquired 9.1 percent of the company’s shares, many people briefly entertained the notion that Musk might try to buy the whole company, only to eventually conclude he had already gotten everything he wanted out of Twitter.
Casey was right in positing that Twitter’s poison pill provisions may not be enough to stop Musk. But he also assumed that Musk would just continue to troll the company through his tweets — which certainly still is a likely outcome.
Anyone who’s been in the market to buy a house knows about “best and final” offers. In his opening salvo, Musk claims his bid to buy Twitter is exactly that. Whether that bolsters his position or ends up painting him into a corner is too early to say. But it is clear that he is offering Twitter’s shareholders a pretty fair premium: $43 billion for a company with a $37 billion market cap.
Musk says that Twitter must go private in order to undergo the changes that need to be made. These include an edit feature, an open-source algorithm, less moderation, and a higher bar for removing offending tweets.
Musk is a very rich guy. So, naturally, he would say that he isn’t interested in buying Twitter to make money. He views Twitter as the “de facto town square” and wants to open source the social media company’s algorithm. He’s trying to frame the whole takeover bid as some sort of crusade to protect free speech.
But even a free speech maximalist like Musk needs to convince shareholders that his buyout offer is in their financial self-interest. Otherwise, what are we really doing here?
Musk is a prolific Twitter user. He’s also a troll, and Liz Lopatto lays out what exactly he will need to do in order to get people to take him more seriously. Musk has a tendency to shoot from the hip, but several corporate governance experts told us they doubt he actually thought this whole thing out.
He hasn’t lined up the financing to buy Twitter and take it private. He is working with Morgan Stanley, but it’s anyone’s guess whether he’s actually listening to them. Musk himself said he may not win in the end. If he succeeds in pressuring Twitter to make the changes he wants, he may just retract his bid. All things are possible.
Behind the scenes, Twitter’s board members are plotting their response to the world’s richest man’s takeover scheme. There’s the poison pill, as well as previous provisions in the company’s bylaws, that could make it extremely difficult for Musk to assume control.
Twitter’s first all-hands meeting after Musk’s bid went public was a weird one. After serenading employees with Backstreet Boys and Aretha Franklin, the company said it would continue to evaluate the offer.
Employees told Alex Heath they were frustrated by the lack of a more detailed response. They’re concerned about the future of the social media platform, as well as the possibility of layoffs.
Hours after announcing his bid to buy Twitter, Musk was on stage in Vancouver for a well-timed interview with TED Talk founder Chris Anderson. During the conversation, Musk spoke about his “obsession with the truth” and echoed comments he made in his SEC filing about wanting to protect free speech and democracy.
But as Adi Robertson points out, his understanding of free speech appears to be nebulous at best. After examining Musk’s comments, as well as previous efforts by Twitter’s leadership to contend with speech laws around the world, she concludes that Musk may be in for a rude awakening if he succeeds in buying the social media platform.
You can not understate what a rollercoaster ride this has been so far. He buys stock! He’s joining the board! No, wait, he’s not joining the board! He could buy more stock! No, wait, he wants to buy the whole megillah! This thing has more twists than a Shyamalan movie. And we’re not even halfway through.
The day after Musk announced his proposal to buy Twitter, the company’s board responded with a poison pill. This is basically the board’s way of saying, “Thanks, but no thanks.”
The poison pill consists of a new “shareholder’s rights plan” to give certain shareholders the right to purchase more stock if Musk or another buyer attempts to seize control. And it signals that Twitter’s board intends to fight Musk’s bid to take sole ownership of the company.
In a new filing with the Securities and Exchange Commission, Musk laid out his plan for the $46.5 billion worth of loans that will allow him to finance the buyout offer made on April 14th. The funding will be provided through two debt commitment letters from Morgan Stanley Senior Funding, in which the bank promises a series of loans worth $25.5 billion. The remaining $21 billion will be covered by Musk himself.
Notably, the filing does not list any equity partners to share the cash burden with Musk. The Tesla CEO already owns a 9 percent stake in Twitter, valued at roughly $2.9 billion.