Elon Musk won’t stop until he turns Twitter into the social network he wants it to be. The Tesla CEO rejected a board seat after acquiring a sizable stake in the company because, as it turns out, he wanted to buy the whole damn thing — and now he has.
Musk is buying Twitter for $54.20 per share, or approximately $44 billion. The bid — hostile in both tone and form — sent Twitter users, employees and executives into a frenzy, and it's unclear exactly what happens now.
So how did we get here, exactly? Let’s break it down.
What's the latest?
On Monday, April 25, Twitter announced that Musk will buy the company. The deal is valued at $54.20 a share and comes after a weekend of negotiations between both parties.
Why does Elon Musk want to buy Twitter?
Musk has said he started buying shares in Twitter as a way to gain influence and steer the company in the direction that he sees fit. He was offered a board seat and said he intended to use it to make what he saw as “significant improvements” to the service. But after finding out that board members don’t make product decisions — and can’t tweet antagonistic suggestions to the company’s executives — he rejected the offered seat, along with the stand-still agreement it came with, and within days made a bid to buy Twitter outright, saying in a filing that he doesn’t have “confidence in management.”
"This is not about the economics. It's for the moral good," Musk said at a TED conference on April 14.
What led to Musk’s takeover bid?
Musk began quietly buying shares at the end of January. By mid-March, he acquired a 5% stake that required prompt disclosure — but he didn’t make the correct filings on time. By the time he did belatedly file the wrong form, he had 9.1% of the company. As he was buying shares, he’d also been in talks with Twitter leadership about a board seat for weeks. On Monday, April 4, he revealed his stake publicly and Twitter offered him a board seat. On April 9, he declined the board seat, and Twitter revealed his decision the next day. On April 12, investors sued Musk for failing to disclose his stake and his intentions toward the company on time.
How does Musk want to transform Twitter?
The Tesla CEO has said he wants to make Twitter more “free speech” friendly and open-source the algorithm that ranks and displays tweets. Critics say those changes would let bots and trolls overrun Twitter with abusive tweets and spam and likely drive away users and advertisers. In other words, the opposite of what Twitter needs right now — at least when it comes to appeasing shareholders. If Musk takes the company private, he can do whatever he wants.
Why is Musk so obsessed with Twitter, anyway?
Though he’s now known as Twitter’s troll-in-chief, for years Musk wasn’t very active on the service. In his first tweet, he said he was only on the service to prevent impersonators from taking his username. He started getting more vocal in 2017 to savage Tesla short sellers, and things snowballed from there. Twitter became Musk’s announcement venue for everything from SpaceX launches to philanthropic endeavors to calling a rescue diver “pedo guy,” an insult that instigated just one of a handful of legal battles over his tweets. He’s garnered a captive audience of more than 81 million followers, enough so even a tweet as simple as “oh hi lol” gets more than 950,00 likes and close to 60,000 retweets.
So, what’s next?
The deal itself is expected to be finalized this year, subject to regulatory and shareholder approval. After that, we wait for Musk's next move. He said in a statement announcing the deal that he wants to make Twitter "better than ever" by making its algorithm open source, "defeating spam bots" and "authenticating all humans." Twitter is expected to report earnings on Thursday, but it won't hold a corresponding call.
The company also filed its proxy statement, a filing that sets up matters for shareholders to vote on at its annual meeting, which is scheduled for May 25. One of those issues is whether to change Twitter’s board structure so directors are elected for one-year terms, rather than three-year terms. Ironically, Twitter’s board has been pushing this change for a while, even though it would make a takeover easier to accomplish; it’s seen as a shareholder-friendly measure. Shareholders had to approve the change by an 80% margin, and even after Twitter delayed a vote last year to garner more support, the measure narrowly failed.
Twitter wouldn’t have to wait for the regular shareholders’ meeting, though. It could call for a special meeting of shareholders with little advance notice. If that includes nominating new board directors, it would have to wait 10 days, according to its bylaws.
What do Twitter employees think about all of this?
Employees have been worried about what Musk means for Twitter since the moment he considered joining its board. Workers have reportedly been frustrated in recent days that they haven't heard much about the deal from management and have asked for guidance from CEO Parag Agrawal and Charles Schwab, the firm that oversees their stock options, according to The New York Times.
Employees' concern is that Musk’s takeover would create the same kind of toxicity and bigotry that has run rampant at Tesla. One said they felt that Musk’s acquisition was backing them into a corner, and another compared it to a “hostage situation.” Agrawal’s totally, completely, absolutely reassuring defense? “I don’t believe we are being held hostage.”
Are you a Twitter employee and want to chat with Protocol? Reach out to Anna Kramer at akramer@protocol.com or via Signal at 610-701-1197.
