The Key Takeaways
- Elon Musk suggested a solution to Ukraine’s war. It included handing parts of Ukraine over to Russia and dropping NATO membership.
- The backlash was widespread and he declared that he planned to continue with the purchase.
- The twisting tale continues and the on-and-off takeover bid has ended up in Delaware.
- Musk tweeted that the u-turn had resulted in Twitter buying, stating that this was an important step towards building X.
Elon Musk announced that he would continue with Twitter’s takeover (Photo: Patrick … [+]
The long-running tale of Elon Musk purchasing Twitter and making it back private took an unexpected twist this week. Tesla CEO is now said to be moving forward with the sale. It’s a major u-turn given that there is currently a lawsuit grinding its way through the courts which aims to force Musk to go ahead with this deal.
It looks like lawyers may be able after all to celebrate Thanksgiving.
This surprise announcement was confirmed on Tuesday when Musk’s lawyers filed a submission with the court stating that he would be proceeding with the original deal as agreed.
On Twitter, many pointed out quickly that Musk’s weight loss was the reason for this. how to end the war in Ukraine. He suggested that Ukraine give large portions of Ukraine to Russia, which included the disputed Crimea region. Also, they drop their NATO application.
He was met with ridicule and disdain by many, including high-profile figures like Volodymyr Zelenskyy, the Ukrainian president, and senior Ukrainian ambassadors.
Musk was highly praised by Moscow for his idea.
This Twitter storm was raining down on Monday, and then on Tuesday Elon Musk’s lawyers filed papers with the court confirming that he would be buying Twitter after all. It is unlikely.
In all seriousness though, it’s unlikely that the Twitter backlash has anything to do with this decision. This is far from the first time Musk has courted controversy on the platform, and it’s unlikely to be the last.
Musk could actually see more of Musk’s ideas and thoughts now that the company is under his control. That’s a fascinating, and somewhat frightening, thought.
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The Twitter deal: What do we know?
Elon Musk offered to acquire Twitter in full back in April. The takeover offer had to be approved by shareholders because it was a publicly traded company. It did, at $54.20 per shares.
It’s not too much of a surprise given that the stock was hovering around $38 in the weeks leading up to the announcement and had been as low as $32.42 back in February.
With the offer accepted and plenty of Tweets flying from Musk’s account about his plans for the platform, the due diligence process began. That’s where the problems started.
Elon Musk stated that fake Twitter accounts were far more common than he believed. According to Musk, he requested detailed information on these so-called ‘bots’, but wasn’t satisfied with the response from the company.
This prompted him to announce that he was not going ahead with the acquisition. But it’s not quite that simple in the world of business.
Twitter shareholders had accepted the deal at that point. Backing out at that point isn’t possible unless something material to the deal had been discovered during the due diligence process.
In Musk’s view, it had. In Twitter’s view, it hadn’t. The question was eventually decided in court, as is often the case with corporate America.
The discovery process provides insight into the billionaire mindset
A few fascinating glimpses into the workings behind the millionaire club have been provided to casual observers. A variety of text messages were conducted between Musk, Square (now Block), founder Jack Dorsey, Parag Agrawal, Twitter CEO, and several other prominent investors during the discovery phase of the lawsuit.
This conversation took place after Musk owned approximately 9% of the stock in Twitter. Musk initially intended to be a shareholder in the company and join its board of directors, but he decided to not take it private.
Some were quite tame. Musk and Dorsey shared ideas about how Twitter could be an open-source protocol, similar to email, rather than being a closed system that is funded through advertising.
Parag Agrawal’s conversation was more casual. After some initial friendly back and forth, the conversation turned sour when Musk published a tweet asking his followers “Is Twitter dying?”
Musk quickly reminded Agrawal of how stirring up such a message wasn’t helpful to Twitter and that it was detrimental to the company’s growth. Musk responded in blunt fashion, asking Agrawal “What did you get done this week?” and saying that “I’m not joining the board. It is a complete waste of time. Will make an offer to take Twitter private.”
The deal has been renegotiated.
Elon Musk’s lawyers’ submission to the court simply stated that “The Musk parties intend to proceed with the closing of the transaction.” This was made under the conditions that the trial in Delaware be adjourned and that the financing could still be arranged.
This doesn’t mean that Twitter will have a new owner tomorrow. It is likely that the entire process will take several months and shareholders may have to wait longer before they can get their hands on any proceeds.
It is still unknown what will happen after the deal has been closed.
Musk tweeted on Tuesday that “Buying Twitter is an accelerant to creating X, the everything app.” Which begs the question, what is the everything app?
So far we don’t know much, much Musk has touched on this briefly in the past. This vision seems to include social media, payments, delivery services, food delivery and text messaging. It also includes video conferencing, gaming, and SMS.
There’s no real equivalent in the US, but Asian examples like WeChat in China, Grab in Singapore and PayTM in India show that the demand is there if the product is right.
It’s an ambitious plan and if he does plan to follow through, it’s also likely to be a very expensive one. It makes perfect sense to make such a pivot in a private business.
The transformation can then be completed without the need to maintain shareholders’ satisfaction with quarterly profits growth. Private ownership offers the advantage of a longer-term view.
What does all this translate into for investors?
If all goes according to plan, pretty soon investors won’t be able to buy stock in Twitter. That’s a big player in the tech space taken off the market, but there are still many others available for investors to choose from.
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