ABOUT
Elon Musk, a business mogul, started the acquisition of Twitter, Inc., an American social media firm, on April 14, 2022, and finished it on October 27, 2022. Musk started purchasing Twitter shares in January 2022, and by April had amassed a 9.1 percent ownership position, making him the company’s largest stakeholder. Musk first accepted Twitter’s invitation to join its board of directors before deciding against it. He launched an unsolicited offer to buy the firm on April 14. Twitter’s board first used a “poison pill” method to fend off a hostile acquisition, but on April 25, they unanimously agreed to accept Musk’s $44 billion offer. Musk said he intended to improve the platform’s functionality, open-source its algorithms, stop spambot accounts, and support free expression.
Image source: File photo of Elon Musk
Musk declared his desire to end the contract in July, claiming that Twitter had broken the terms by refusing to take action against spambot accounts. Shortly later, the business sued Musk in the Delaware Court of Chancery; the trial was set for the week of October 17. A few weeks before the trial was scheduled to start, Musk announced that he would proceed with the acquisition. On October 27, the sale was finalized, and Twitter was taken private. Musk was appointed as the company’s new owner and CEO right away. After buying Twitter, Musk swiftly let go of a number of top officials, including the previous CEO Parag Agrawal. Since then, Musk has suggested a number of changes for Twitter and fired half of the staff. Then, hundreds of workers The buyout has received mixed reviews, with some applauding Musk’s proposed changes and his vision for the company, particularly his calls for greater freedom of speech, while others have voiced concerns about the possibility of an increase in false information, disinformation, harassment, and hate speech on the platform. The acquisition has mostly received praise from conservatives, but many liberals and ex-Twitter employees have expressed concern about Musk’s motivations. Since taking control, Musk has received criticism for his management of the business and account bans.
Background
Business tycoon Elon Musk sent out his first tweet on his personal Twitter account in June 2010, and by April 2022, he had amassed more than 80 million followers. When a tweet urging Musk to purchase Twitter Inc. was sent in 2017, Musk responded, “How much is it?” Musk started tweeting complaints about Twitter on March 24, 2022, asking his followers if they believed that the social media platform upheld the notion that “free expression is important to a functioning democracy.” Days later, he had a conversation with Twitter co-founder and former CEO Jack Dorsey about the direction of social media, and he also looked about joining Twitter’s board of directors with Silver Lake co-CEO Egon Durban. He shared this concept with Twitter CEO Parag Agrawal and board chair Bret Taylor. suggesting to either launch a competing social media platform or take the company private. [9] In a text message, Dorsey replied to Musk, expressing his desire for Twitter to become open-sourced and recalling his fruitless efforts to get Musk appointed to Twitter’s board a year earlier, which led to his resignation as CEO.
First developments
On January 31, 2022, Musk started buying shares of Twitter.
He declared on April 4 that he had purchased 9.2% of the company’s shares worth $2.64 billion[11], making him the largest stakeholder.
After the news, Twitter’s shares saw its biggest intraday increase since the company’s initial public offering (IPO) in 2013, increasing by as high as 27%. Musk accepted Twitter’s invitation to join the board of directors the following day[14]. [15] Three days prior, the Nominating and Corporate Governance Committee of Twitter had recommended this to the board, raising concerns from several board members regarding possible “adverse implications on investor value.” The job would have prevented Musk from owning more than a 14.9 percent stake and restricted his capacity to speak. Musk opted against joining the board on April 11, following the publication of many tweets that were critical of the corporation. Instead, he told Twitter that he would be making a takeover bid for the business. Twitter’s board of directors held a meeting with legal and financial advisers on April 12 to discuss the implications of such a deal as well as their options, while Musk was being sued by a shareholder for allegedly manipulating the company’s stock price and breaking Securities and Exchange Commission rules.
Musk opted against joining the board on April 11 after tweeting several negative things about the organization. [17] Instead, he told Twitter that he was going to submit a bid to buy the company out. On April 12, the board of Twitter met with legal and financial advisors to discuss the implications of such a deal as well as their options[9], while Musk was being sued by company shareholder Marc Bain Rasella for allegedly manipulating the stock price and breaking Securities and Exchange Commission regulations.
Due to market volatility, Elon Musk issues a caution against using margin debt.
Due to the possibility of a “mass panic” in the stock market, billionaire Elon Musk is advising against doing what he himself has done: borrowing against the value of shares one owns. In the All-In podcast, which was released on Friday, Elon Musk said, “I would really advise folks not to have margin debt in a volatile stock market and you know, from a cash sense, keep powder dry.” In a weak market, “you can have some really drastic things happen. “When he paid $44 billion for Twitter earlier this year and added $13 billion in debt to the company, Tesla CEO put up millions of his own dollars. After the most recent sales, Mr. Musk once more declared this week that he would halt selling shares, adding that the hiatus might extend for about two years. Ironically, Mr. Musk’s warning—at least his second this month—comes after he previously pledged his Tesla stock. According to an SEC filing from April 2022, Mr. Musk had 92 million Tesla shares pledged as collateral as of December 2020.
According to a report by Bloomberg News, Mr. Musk’s lenders are thinking of refinancing some of the high-interest debt he piled on Twitter with fresh margin loans secured by Tesla stock and subject to his personal repayment obligations. Additionally, he sold nearly $40 billion worth of Tesla shares, which caused the stock to drop to a two-year low.
acquisition notification
Taylor was notified by Musk that his offer was “best and final” on April 23, and the next day, Musk urged Taylor to accept in a letter.
Subsequently, other media sites said that Twitter was finalizing its agreement to accept Musk’s offer, with a deal anticipated to be struck the following day. However, Reuters warned that the agreement may still fall through. Following news that Twitter was prepared to accept Musk’s offer, shares of Twitter increased by 5% on April 25. The acquisition was approved by Twitter advisors JPMorgan Chase and Goldman Sachs, who both thought it was fair from a financial standpoint. The buyout bid of $44 billion was publicly and unanimously accepted by Twitter’s board, and upon completion of the transaction, Twitter was to become a private firm.
Image source: File photo of Elon Musk
In 2022. Taylor, Martha Lane Fox, and Patrick Pichette made up the transaction committee of the board, which oversaw negotiations with Musk. Before it could be completed, the purchase would need shareholder and regulatory approval , though experts thought there was little chance that the regulators would object. Musk was forbidden from criticizing the business or its employees in his tweets regarding the acquisition prior to the deal’s completion. The deal also stated that Musk would be obligated to pay Twitter a $1 billion breakup fee if he failed to complete the acquisition. The buyout was expected to net Agrawal $39 million while giving Dorsey $978 million. Musk had informally chosen a new CEO to succeed Agrawal after the transaction was complete, even though he was anticipated to continue in that role.
On May 4, Musk was called before the Digital, Culture, Media and Sport Committee of the UK House of Commons to investigate how his buyout might affect free speech and “internet harms.” The following day, Musk raised an additional $7.1 billion from investors including Qatar Holding, Saudi prince Al Waleed bin Talal Al Saud, venture capital firms Andreessen Horowitz and Sequoia Capital, and Larry Ellison, co-founder of Oracle Corporation. His original personal bank loan of $12.5 billion was reduced by the equity infusion to $6.25 billion, and the needed cash equity commitment was lowered from $21 billion to slightly under $20 billion. The Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC) have initiated investigations into the circumstances that led up to to the purchase. The following day, Agrawal dismissed Bruce Falck, the revenue product lead, and Kayvon Beykpour, the general manager of Twitter.
Termination attempt
Hold allegedly After learning that 5% of Twitter’s daily active users were spam accounts, Musk said he had put the transaction “on hold” on May 13; this caused Twitter shares to decline by more than 10%.Agrawal said he anticipated the purchase closing, and Musk underlined that the acquisition was still a priority for him. Musk tweeted a poop emoji in response to Agrawal’s claim on Twitter on May 16 that it was impractical to conduct an outside investigation of platform users. The next day, Musk reaffirmed that the acquisition could not “go further” until Twitter could show that the aforementioned rumors were untrue. calling on the SEC to look into Twitter’s daily user figures. On that day, Twitter submitted fresh paperwork to the Despite Musk’s actions, the SEC stated that they will “enforce the merger agreement,” including providing a thorough timeline of Musk’s purchases On May 25, Musk decided against pledging an additional $6.25 billion in equity financing, abandoning his plans to partially finance the purchase with margin loans secured by Tesla stock. The same day, Dorsey left Twitter’s board and Musk was sued in a class-action lawsuit by a Twitter investor who claimed Musk had manipulated the market in violation of California corporation law. The lawsuit also claimed that Musk was not authorized by the acquisition contract to put the transaction on hold and that Musk’s false comments had caused Twitter stock prices to fall.
The transaction was approved by the American antitrust review on June 3. Three days later, Musk threatened to sever his relationship with Twitter in an email sent by his lawyer to the company after Twitter refused to give him user data. Twitter reacted by saying that they will keep working with Musk to make sure the deal was completed as per their agreement. Musk demanded that Twitter’s board give him access to a “firehose” of tweets on June 8, and Twitter consented. A week later, the SEC requested Agrawal to provide details on how Twitter determined the number of spam accounts; the company complied. The SEC’s investigation was completed on July 27. [92] [93] In June, Musk went to an all-hands meeting 16 to respond to queries from Twitter staff, covering topics such as Twitter’s content moderation guidelines, free expression, probable layoffs, remote employment, and “the cosmic essence of Twitter.” Additionally, Musk pledged his commitment to using advertising as Twitter’s primary source of income and stated his ambition for the social media platform to have one billion active users.
Musk’s withdrawal attempt
On July 8, Musk declared his desire to cancel the planned acquisition, stating in a regulatory filing that Twitter had violated several terms of the deal by refusing to provide information about spambot accounts and firing high-ranking staff.
[105][106] Taylor responded by promising to sue Musk in the Delaware Court of Chancery to complete the acquisition,[107][108] with the resulting case once more being managed by the Twitter board’s transaction committee. [45] Next the news, Twitter’s stock fell by 7% before falling by another 11% the following day. [109] In order to represent itself in court, Twitter on July 10 recruited Wachtell, Lipton, Rosen & Katz, including “important lawyers” William Savitt and Leo Strine as well as Ballard Spahr, Kobre & Kim, Potter Anderson & Corroon, and Wilson Sonsini Goodrich & Rosati. [111] Musk rehired Quinn Emanuel Urquhart & Sullivan, including his personal attorney Alex Spiro, as well as Skadden, Arps, Slate, Meagher & Flom, after doing so for Unsworth v. Musk and SEC.
On July 12, Twitter filed a lawsuit against Musk at the Delaware Court of Chancery, to which Musk replied with the tweet “Oh the irony lol.” Before the deal’s initially planned “drop dead” date of October 24, Twitter requested that the trial be run from September 19 through September 22, This was rejected by Musk’s legal team, who then requested that the trial be held from February 13 through February 22, 2023. The trial will span five days in October, according to a ruling made by judge Kathaleen McCormick on July 19, with Twitter requesting a commencement date of October 10. Twitter attributed the majority of its revenue decline to the “chaos” produced by the proposal during its investor call to discuss its quarterly profits on July 22.Writing to McCormick on April.