TWITTER TAKEOVER
Agrawal, five months into his role as Twitter chief executive, was delivering on. And it asked its bankers to triple-check if there was any other bidder who could offer more than Musk.
The transaction came together at breakneck speed in part because Musk waived the chance to look at Twitter’s finances beyond what was publicly available, but also because that’s how the billionaire works. The 50-year-old Tesla Inc. head was deeply involved in the details of the transaction, according to people familiar with the process. And because he was an individual investor unencumbered by a board or shareholders — unlike a corporate bidder — Musk was able to make many of the big decisions on his own.
This account of how Musk’s deal for Twitter came together is based on interviews with four people familiar with the negotiations, who requested anonymity to discuss them.
Representatives for Musk, Twitter and the banks either declined to comment or did not respond to requests for comment.
Overseeing deal negotiations for Twitter was its board chairman Bret Taylor, who is also co-chief executive of Salesforce. It became clear to Twitter’s board directors there was no white knight, as technology and media companies fretted about the potential antitrust risk, while private equity firms could not saddle the company with enough debt to juice returns, given its limited cash flow.
Musk had said he did not care about the economics of the deal “at all” and was pursuing Twitter to advance free speech, disillusioned by many of its platform moderation decisions.
His bid was not rich by historical standards. While it came with a 38% premium to where Twitter shares were trading before April 4, when he emerged as a Twitter shareholder, the stock had traded higher than his offer for most of last year.
Twitter’s bankers projected, however, that even if the company did as well as last year, investors would value it less, because the advertising market in the social media world had become more price-competitive. The board did not believe Agrawal could bring the stock back to $54.20 anytime soon.
If Twitter ignored Musk, some of the investors threatened to side with him in a tender offer that he had said he was exploring. A poison pill that Twitter had adopted would protect the company from a takeover, but it would not spare it from publicly losing the support of its shareholders.
The stars aligned for Musk in more ways. Technology stocks plunged for most of April amid concerns over inflation and an economic slowdown - a bleak backdrop for Twitter.
Musk also had some allies on Twitter’s board. Egon Durban, the co-head of private equity firm Silver Lake who partnered with Musk on his abandoned bid for Tesla, serves on Twitter’s board. Jack Dorsey, another board director and the company’s former CEO, shares Musk’s passion for cryptocurrencies and has often exchanged compliments with him online.
“Elon is the singular solution I trust. I trust his mission to extend the light of consciousness,” Dorsey tweeted on Monday, adding that taking Twitter “back from Wall Street is the correct first step”.
Twitter’s advisers met with Musk on Sunday and tried to convince him to raise his offer, but he stuck to his position that the $54.20-per-share offer was his “best and final”.
As a small concession, Musk agreed to offer Twitter a chunky break-up fee in the event he changed his mind and walked away. The exact fee is expected to be disclosed in regulatory filings on Tuesday.
On Monday, the two sides agreed to a deal, and Twitter’s board met to approve it later in the day. Twitter shares, which ended trading at $45.08 the day that Musk unveiled his bid, closed at $51.70, a small discount to the deal price. “I hope that even my worst critics remain on Twitter, because that is what free speech means,” Musk tweeted.