On Thursday, April 14, Elon Musk announced an offer to buy Twitter for $54.20 per share. On April 25, Twitter accepted the deal. By July 8, Musk wanted out. Then Twitter sued Musk. And now we’re headed to Chancery Court in Delaware for a five-day trial in October that will determine who owns Twitter — and what happens after that.
It is a very big story with very fast moving parts. It is also a story that will probably spread over the next few months, perhaps even longer. That’s why we thought we’d put together a guide for you, our readers, that may be updated as things continue to unfold. That’s why, like ElonWe ️ you.
So strap in. It is going to be a bumpy ride.
Peter “Mudge” Zatko was fired as Twitter’s chief of security in early 2022. In July, he filed a whistleblower report saying that Twitter concealed reckless security practices, misled federal regulators about its security, and failed to properly estimate the number of bots on its platform. Zatko is a long-serving and well-respected voice in the hacker and security community, and his allegations are sure to have a huge impact inside and outside Twitter. Congress, for one, has already said that it is investigating the claims of the Jatkos.
Zatko’s disclosures directly stated that Twitter lied to Musk about its spam and bot measurements, which may have been fodder for Musk’s complaints about spambots, although those specific allegations were not attributed to Zatko. The support seems quite thin. Twitter denied all the allegations, calling them a “false narrative”.
The pre-trial summons include who’s from the tech industry, including Dorsey, Larry Ellison, Marc Andreessen, Tesla, Keith Rabois, and many more. Dorsey was a surprise, but given his tenure as Twitter CEO and the fact that Dorsey worked hard to convince Musk to buy the company in the first place, he may have had a lot of relevant information. is likely to.
Rest of the story so far:
The financial structure of Musk’s Twitter acquisition has changed over time, but even after promising in April that “no more TSLA sales are planned after today,” Musk sold another large batch of his shares. “In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through,” he tweeted soon after, “it’s important to avoid emergency sale of Tesla stock.”
Musk’s side wanted more time and testing began in February 2023. Twitter wanted it to get started as soon as possible. Delaware Chancellor Kathleen McCormick, who oversaw the test, said the trial would begin on October 17 and last for five days. Of course, this assumes that the two parties do not compromise, and that’s anyone’s guess.
Twitter is already feeling the Musk effect: When it reported earnings in July, the company said its revenue fell for a variety of macroeconomic reasons, but also that it was “related to the pending acquisition of Twitter by an affiliate.” described as “uncertainty”. Elon Musk.” One thing Twitter wouldn’t attribute to Musk? Its user growth. The service reported reaching more than 237 million daily users, up from 229 million last quarter. It was, of course, “running.” product improvements”.
What we usually won’t tell you is that it’s worth reading a 162-page legal filing that delves deeper into the weeds of bot measurement processes. But the case is fraught with unusually spicy legal battles, most of which were written explicitly for a wider audience to read. This is a good thread.
Almost as soon as Musk clarified his intentions to opt out of buying Twitter, Twitter filed a lawsuit, saying: You agreed to pay $44 billion for Twitter, and we for our shareholders. All intend to receive $ 44 billion. Twitter filed its lawsuit in the Delaware Court of Chancery, which immediately became the most exciting judicial system no one had ever heard of. It paints a picture of Musk making an unexpected and unusually generous offer on Twitter, only to almost immediately turn around and start messing with the company and their idea of abandoning the deal.
Twitter has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable for his contractual obligations.
— Brett Taylor (@btaylor) 12 July 2022
It looked like it was about to happen, and then it happened: Just weeks after announcing his intention to buy Twitter, Musk tried to walk out of it. Musk’s team claimed he was terminating the deal because Twitter was in “material breach” of their agreement and made “false and misleading” statements during the negotiations. In particular, Musk was concerned about the proliferation of fake or spam accounts on Twitter and what he saw as Twitter’s reluctance to substantiate his own research on the subject.
Musk joined Twitter employees in a virtual town hall and attempted to answer their questions about the future of the company and the platform. He gave vague answers about emulating WeChat and learning from TikTok and letting people work from home more often, while saying Twitter will attract 1 billion users. Meanwhile, he hinted that the company may see significant layoffs in the future.
After a series of offensive tweets and “just asking questions” moves, Musk’s legal team made its first official threat to back down from the acquisition. In a legal filing, he claimed that Twitter failed to provide Musk with information about the service’s spam bot problem and that he is entitled to receive that information under the deal agreement. Twitter, he wrote, was actively preventing him from getting the information he needed.
“My proposal was based on the accuracy of Twitter’s SEC filings,” Musk tweeted, referring to Twitter’s oft-quoted number that less than 5 percent of accounts on the platform were fake or spam. “Yesterday, Twitter’s CEO declined to publicly show proof of <5%. This deal can't move forward until he does." Musk's frustration appeared completely beside the point and the kind of thing he should have raised before this Signing a binding agreement to purchase the company. But it was clear that if Musk decided that he did Want out, this would be his way.
The turmoil inside Twitter wasn’t just coming from Musk and his legal team. The company’s still-new CEO Parag Agarwal fired some of its top executives, including consumer products leader Kywan Becpour, and Bruce Falk, general manager of revenue and product chief on its business side. In a memo to Twitter employees, Agarwal said in a memo to Twitter employees, “The priorities and decisions we make now will strengthen the way we navigate not only through this time, but also for the long-term success of Twitter, which I deeply appreciate.” care for.”
Another big Twitter-under-musk question is what he will do about the platform’s permanent ban on Donald Trump. Musk said during a financial Times convention that he would undo it. “I think the answer is that I’ll reverse Paramban,” he said, “obviously I don’t have Twitter yet, so it’s not something that will definitely happen because if I don’t have Twitter. then what will happen?”
Could Twitter Blue be the future of Twitter? Musk thinks so. He believes he can turn Twitter subscriptions into a $10 billion business by 2028, which will be twice the current revenue of the entire company. Of course, that also includes huge user growth: Musk estimates Twitter could have 600 million users in 2025 and 931 million in 2028. This is a huge jump from the company’s current crop of 217 million users.
On April 25, Twitter’s board of directors accepted Musk’s offer of $54.20 per share, or $44 billion, for total control of the company. This was the same price he had named in his initial offer on April 14. Upon completion of the transaction, Twitter will become a private company. Musk began working on funding for the deal and sold 9.6 million of his Tesla shares to free up about $8.4 billion.
Hours after announcing his bid to buy Twitter, Musk was on stage in Vancouver for an interview with TED Talk founder Chris Anderson. During the conversation, Musk talked about his “passion for truth” and echoed comments made in his SEC filings about free speech and desire to defend democracy.
But as Adi Robertson pointed out, his understanding of free speech appears to be vague at best. After examining Musk’s comments, as well as Twitter’s leadership’s previous efforts to contend with speech laws around the world, she concluded that Musk may be in for a rude awakening if he decides to buy the social media platform. succeeds.
Twitter’s first one-on-one meeting since Musk’s bid became public was an awkward one. After serving on staff with the Backstreet Boys and Aretha Franklin, the company said it would continue to evaluate the proposal.
employees told ledgeof Alex Heath was disappointed by the lack of a more detailed response. They are concerned about the future of the social media platform as well as the possibility of layoffs.
Musk is a very rich man. So, naturally, he would say that he is not interested in buying Twitter to make money. He sees Twitter as a “real city square” and wants to open source the social media company’s algorithms. He tried to frame the entire takeover bid as some sort of crusade to defend free speech.
But even free speech maximalists like Musk need to convince shareholders that their buyout offer is in their financial interests. Otherwise, what are we really doing here?
Anyone in the market to buy a home knows about the “best and last” offer. Musk claimed in his opening salvo that his bid to buy Twitter was exactly the same. He was offering Twitter shareholders a fairly reasonable premium: $43 billion for a company with a $37 billion market cap.
Musk said Twitter needs to be private in order to go through the changes it needs. These included an edit feature, an open-source algorithm, low moderation, and a high bar for removing offensive tweets.
After news broke that Musk had acquired 9.1 percent of the company’s shares, many briefly entertained the notion that Musk might try to buy out the entire company, only to eventually conclude that he did. Already got everything he wanted from Twitter.
Casey was right that Twitter’s poison pill provisions may not be enough to deter Musk. But he also assumed that Musk would continue to troll the company through his tweets.
After being reduced to a seat on Twitter’s board, Musk updated his filing with the Securities and Exchange Commission to indicate that he will not be a passive player in the company’s affairs. The language had gone that he would limit his stake to just 14.0 percent of the company. In retrospect, it was the first sign that he might be trying something more impressive than buying some stock while serving as a board member.
A thousand years ago, on April 4, 2022, Elon Musk announced that he had bought 9.1 percent of Twitter. With news that the world’s richest man was now (briefly) the largest shareholder in his favorite social media platform, the stock price soared and many keyboards became A-typing.
Musk immediately set about asking for suggestions about ways to improve Twitter — what else — by tweeting a poll. The company responded by offering him a board seat, a move that would have restricted him to owning just 15 percent of the company. At first he said yes. Then he changed his mind and said no. In the meantime, our resident Twitter and Musk experts, Casey Newton and Liz Lopato respectively, dig deeper into why Musk was flirting with Twitter and what the potential consequences would be.