As of April 25th, 2022, Elon Musk tried to take over Twitter. Musk tried to purchase the company at $54.20 per share, or about $44 billion. The deal finally closed by October 27th, 2022, and Elon Musk became the largest shareholder.
Elon musk is Twitter’s owner
In short, Musk confirmed himself as the meme king of the platform. While this might seem all a joke, it’s, in reality, the acquisition of one of the largest media platforms in the US.
As Musk took over, he had the main executive team resign immediately.
What’s going to happen next?
Twitter will be delisted (it won’t be a public company anymore) as Musk, and his new executive team will come in and try to restructure the company.
Thus, either opening up the change to list it again in the coming years or keep it as a private company, outside the influence of quarter-to-quarter financials.
How was Twitter ownership organized before Musk bought it?
The largest individual shareholder is Elon Musk, followed by co-founder and former CEO Jack Dorsey. Other non-individual, institutional shareholders comprise The Vanguard Group (with 10.7%), BlackRock (with 6.8%), and Morgan Stanley (with 87%).
The timeline of Elon Musk’s acquisition of Twitter
Let’s review the timeline.
Musk placed a bet to take over the whole company out of the blue. It was April 14th, 2022:
The public records show the whole conversation of the offer Musk made to take over Twitter.
Below is the main extract, of the conversation, between Musk and Twitter’s board.
As per SEC Filings, Musk had sent a message to Bret Taylor, Chairman of Twitter’s board:
I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.
However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.
As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.
Twitter has extraordinary potential. I will unlock it.Elon Musk
In a follow-up text, Musk highlighted:
As I indicated this weekend, I believe that the company should be private to go through the changes that need to be made.
After the past several days of thinking this over, I have decided I want to acquire the company and take it private.
I am going to send you an offer letter tonight, it will be public in the morning.
Are you available to chat?Elon Musk
As a final message to Twitter’s board, Musk highlighted:
1. Best and final
a. I’m not playing the back-and-forth game.
b. I have moved straight to the end.
c. It’s a high price and your shareholders will love it.
d. If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.
i. This is not a threat, it’s simply not a good investment without the changes that need to be made.
ii. And those changes won’t happen without taking the company private.
2. My advisors and my team are available after you get the letter to answer any questions
a. There will be more detail in our public filings. After you receive the letter and review the public filings, your team can call my family office with any questions.Elon Musk
In short, Musk had offered to purchase Twitter for $54.20 per share, a 54% premium, before Musk had started to buy Twitter shares.
While the offer was good from a valuation standpoint, the board tried to fight it. Also influential business commentators were against it.
As Cramer highlighted:
This is one of those where they are literally not doing their job, there’s no fiduciary responsibility if they just say, ‘you know what, we take it, there are times when individual directors are opened up for a level of lack of fiduciary that I think crosses the line. This crosses the line.
Throughout the deal, none expected it to go through so quickly.
Indeed, given the controversy around Twitter, most business people thought this would have turned into a few months’ fight over Twitter’s ownership.
Yet, things tumbled very quickly. And by April 25th, 2022, the deal was officially announced!
As explained in the official press release:
Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter.
Bret Taylor, Twitter’s Independent Board Chair, highlighted:
The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.
Parag Agrawal, Twitter’s CEO, highlighted on Twitter
Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.
How did Elon Musk secure the funding to purchase the company?
He secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment.
After one of our most epic business battles, the deal closed by October 26-27 as Musk entered Twitter’s HQ to meet the team.
Wanter Isaacson, working on a biography of Musk, thus following him as he talks to Twitter’s team for the first time, shows a group of people listening to Musk.
As Musk takes ownership of Twitter, he sends over a public letter to advertisers: