While Musk became Twitter Inc’s new owner, he fired top executives he had accused of misleading him and providing little clarity over how he will achieve the lofty ambitions he has outlined for the influential social media platform.
After revolutionizing the auto industry, sending his own rocket to space — with his car on board — and building the world’s biggest fortune, the eccentric billionaire is the new king of social media It is the latest corporate conquest for Musk, after online publishing and payments, space travel and electric cars. The 51-year-old is the richest person in the world, a title he took last year from Amazon‘s Jeff Bezos following the meteoric rise of Tesla, his electric automaker founded in 2003.
The acquisition is the culmination of a remarkable saga, full of twists and turns, that sowed doubt over whether Musk would complete the deal.
How it all began
It began on April 4, 2022 when Musk disclosed a 9.2% stake in the company, making him its largest shareholder.
The world’s richest person then agreed to join Twitter’s board, only to balk at the last minute and offer to buy the company instead for $54.20 per share, an offer that Twitter was unsure whether to interpret as another of Musk’s cannabis jokes.
Musk’s offer was real, and over the course of just one weekend later in April, the two sides reached a deal at the price he suggested. This happened without Musk carrying out any due diligence on the company’s confidential information, as is customary in an acquisition.
In the weeks that followed, Musk had second thoughts. He complained publicly that he believed Twitter’s spam accounts were significantly higher than Twitter’s estimate, published in regulatory filings, of less than 5% of its monetizable daily active users. His lawyers then accused Twitter of not complying with his requests for information on the subject.
The acrimony resulted in Musk giving notice to Twitter on July 8 that he was terminating their deal on the grounds that Twitter misled him about the bots and did not cooperate with him. Four days later, Twitter sued Musk in Delaware, where the company is incorporated, to force him to complete the deal.
By then, shares of social media companies and the broader stock market had plunged on concerns that the Federal Reserve’s interest rate hikes, as it seeks to fight inflation, will push the U.S. economy into recession. Twitter accused Musk of buyer’s remorse, arguing he wanted to get out of the deal because he thought he overpaid.
Most legal analysts said Twitter had the strongest arguments and would likely prevail in court. Their view did not change even after Twitter’s former security chief Peiter Zatko stepped forward as a whistleblower in August to allege that the company failed to disclose weaknesses in its security and data privacy.
On Oct. 4, just as Musk was set to be deposed by Twitter’s lawyers ahead of the start of their trial later in the month, he performed another u-turn and offered to complete the deal as promised. The Delaware judge gave him an Oct. 28 deadline to close the transaction and avoid the trial.
On Wednesday, Musk tweeted “let that sink in.” He changed his description in his Twitter profile to “Chief Twit.” Twitter shares ended trading on Thursday in New York up 0.3% at $53.86, a small discount to the $54.20 per share deal price. The stock will be delisted from the New York Stock Exchange on Friday.
Musk fires CEO Parag Agrawal, CFO Ned Segal and Chief Legal Counsel Vijaya Gadde
With Musk taking over, Twitter Inc. Chief Executive Officer Parag Agrawal is among executives planning to depart. Also leaving are Vijaya Gadde, the head of legal, policy and trust; Chief Financial Officer Ned Segal, who joined Twitter in 2017; and Sean Edgett, who has been general counsel at Twitter since 2012.
Agrawal stepped into the CEO role in November, when co-founder Jack Dorsey unexpectedly resigned. Agrawal had been at Twitter for almost a decade, most recently as chief technology officer, but his run as CEO was quickly disrupted by Musk’s arrival as a major shareholder and increasingly vocal antagonist of its current leadership.
After Musk showed up, it became clear that Agrawal was unlikely to keep his job. “I don’t have confidence in management,” Musk said in one early filing about the deal, and the two executives exchanged some public swipes.
Musk privately clashed with Agrawal in April, immediately before deciding to make a bid for the company, according to text messages later revealed in court filings.
About the same time, he used Twitter to criticize Gadde, the company’s top lawyer. His tweets were followed by a wave of harassment of Gadde from other Twitter accounts. For Gadde, an 11-year Twitter employee who also heads public policy and safety, the harassment included racist and misogynistic attacks, in addition to calls for Musk to fire her.
Efforts by former Twitter CEO Jack Dorsey to reconcile Musk, a longtime Dorsey friend, and Agrawal after the deal was announced also ended poorly. “At least it became clear that you can’t work together,” Dorsey messaged Musk after a group call. “That was clarifying.”
Agrawal won’t be leaving empty handed
As part of the deal, the CEO will vest 100% of his unvested equity awards, according to a filing. Research firm Equilar estimated that means he’ll make an estimated $42 million, Reuters reported.
Agrawal was previously Twitter’s chief technology officer (CTO) and his total compensation for 2021 was $30.4 million, according to reports.
Musk says he is not buying Twitter for more money, but for humanity
The CEO of electric car maker Tesla Inc has said he wants to “defeat” spam bots on Twitter, make the algorithms that determine how content is presented to its users publicly available, and prevent the platform from becoming an echo chamber for hate and division, even as he limits censorship.
He has said he plans to cut jobs, leaving Twitter’s approximately 7,500 employees fretting about their future. He also said on Thursday he did not buy Twitter to make more money but “to try to help humanity, whom I love” and doesn’t want it to become a “free-for-all hellscape.”
The message appeared to be aimed at addressing concerns among advertisers — Twitter’s chief source of revenue — that Musk’s plans to promote free speech by cutting back on moderating content will open the floodgates to more online toxicity and drive away users.
“The reason I acquired Twitter is because it is important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence,” Musk wrote in an uncharacteristically long message for the Tesla CEO, who typically projects his thoughts in one-line tweets.
He continued: “There is currently great danger that social media will splinter into far right wing and far left wing echo chambers that generate more hate and divide our society.”
Musk wants Twitter to be ‘most respected advertising platform’
Musk has previously expressed distaste for advertising and Twitter’s dependence on it, suggesting more emphasis on other business models such as paid subscriptions that won’t allow big corporations to dictate policy on how social media operates. But on Thursday, he assured advertisers he wants Twitter to be “the most respected advertising platform in the world.”
“There has been much speculation about why I bought Twitter and what I think about advertising. Most of it has been wrong,” Musk said in a tweet on Thursday.
“Fundamentally, Twitter aspires to be the most respected advertising platform in the world that strengthens your brand grows your enterprise.”
Musk also responded with “absolutely” to a tweet calling for top content creators on Twitter to be compensated similarly to other social media platforms.
Ad sales accounted for more than 90% of Twitter’s revenue in the second quarter, and the company was struggling to keep its most active users who are vital to the business.
The note is a shift from Musk’s position that Twitter is unfairly infringing on free speech rights by blocking misinformation or graphic content. But it’s also a realization that having no content moderation is bad for business, putting Twitter at risk of losing advertisers and subscribers.
Thursday’s note to advertisers shows a newfound emphasis on advertising revenue, especially a need for Twitter to provide more “relevant ads” — which typically means targeted ads that rely on collecting and analyzing users’ personal information.
Will Donalt Trump return on Twitter?
The self-described “free speech absolutist” said in May he would reverse Twitter’s ban on former U.S. President Donald Trump, who was removed from the microblogging site in January last year over the risk of further incitement of violence after the storming of the U.S. Capitol.
The question of reinstating Trump on the social media platform has been seen as a litmus test of how far Musk will go in making changes, even though Trump himself has said he would not return. He has instead launched his own social media app, Truth Social.
Advertisers are not buying into Musk’s pitch and point to Musk’s plan to reinstate the account of former U.S. President Donald Trump as a major impediment to spending money on Twitter.
Welcoming back Trump could alienate moderate and liberal-leaning users, and as a result push away major household brands who aim to market products and appeal to people across the political spectrum, said Mark DiMassimo, founder of ad agency DiMassimo Goldstein.
Loans, investments and piles of his own cash: How Musk financed Twitter takeover
In looking for ways to pay for his takeover of Twitter, Elon Musk offered money sourced from his own personal assets, investment funds and bank loans, among others.
Here are the financing details for the deal, which was finalized Thursday according to US media:
At first, the Tesla head had hoped to avoid contributing any more than $15 billion of his personal money to the $44 billion deal. Around $12.5 billion was set to have come from loans backed by his shares in the electric car company — meaning he would not have had to sell those shares.
Ultimately, Musk abandoned the loan idea and put up more funding in cash. He sold $15.5 billion worth of Tesla shares in two waves, in April and in August.
In the end, Musk will personally cough up a little more than $27 billion in cash in the transaction.
And importantly, Musk, who Forbes magazine says is worth around $220 billion, already owns 9.6 percent of Twitter in market shares.
The total sum of the deal also includes $5.2 billion from investment groups and other large funds, including from Larry Ellison, the co-founder of software company Oracle, who wrote a $1 billion check as part of the arrangement.
Qatar Holding, which is controlled by Qatar’s sovereign wealth fund, the Qatar Investment Authority, has also tossed capital into the pot.
And Prince Alwaleed bin Talal of Saudi Arabia transferred to Musk the nearly 35 million shares he already owned.
In exchange for their investments, the contributors will become Twitter shareholders.
The rest of the money — about $13 billion worth — is backed by bank loans, including from Morgan Stanley, Bank of America, Japanese banks Mitsubishi UFJ Financial Group and Mizuho, Barclays and the French banks Societe Generale and BNP Paribas.
These loans are guaranteed by Twitter, and it is the company, not Musk himself, which will assume the financial responsibility to pay them back.
The California company has so far struggled to generate profit and has worked at an operating loss over the first half of 2022, meaning the debt generated in the takeover could add even more financial pressure to the social media platform’s already shaky position.
Denial of responsibility! planetcirculate is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.