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 May 13, Musk tweeted that the deal is “temporarily on hold” as he presses the company on how it estimates the number of bot accounts on the platform. (“On hold” doesn’t mean much, because the deal has to be completed or not by Oct. 24.)
On May 14, Twitter CEO Parag Agrawal tweeted defending the company's estimates that less than 5% of reported daily active users are spam accounts. Musk publicly trolled Agrawal, tweeting a poop emoji at him and questioning whether advertisers can trust Twitter’s accounting of its bot problem in an apparent bid to renegotiate the deal for a lower price or back out of it altogether.
The following day, Musk continued to dispute Twitter's spam bot numbers at a tech conference in Miami and said it was "not out of the question" that he might renegotiate the deal at a lower price — a move that isn't contemplated in his binding purchase agreement.
On May 17, Twitter invited shareholders to an upcoming (but as yet unscheduled) special meeting to vote on Musk's takeover offer, a sign that it anticipates the deal moving ahead. Twitter's board also said it intends to "close the transaction and enforce the merger agreement" in a statement to Bloomberg.
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
He also has a few ideas on how to make Twitter less dependent on ads as its primary revenue driver. Some of his plans include slashing the salaries of board members to a whopping $0, boosting revenue by finding new ways to monetize tweets, and adding more features to the $2.99/month Twitter Blue subscription service, including the verified blue check mark, an ad-free interface and additional edit capabilities.
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?
Under the agreement, the deal must be consummated by Oct. 24, 2022, subject to regulatory and shareholder approval. 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."
Musk still needs to finalize his funding for the deal. He's already reduced the debt component by lining up more equity funding, including money from Oracle founder Larry Ellison, a16z, Sequoia Capital, and Binance. Prince Alwaleed Bin Talal, a longtime Twitter shareholder, is rolling his stake into the deal, and Musk has talked to Twitter co-founder Jack Dorsey about doing the same.
The company filed a 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 also called for a special meeting of shareholders to vote on Musk's merger proposal. That meeting hasn't been scheduled yet.
What do Twitter employees think about all of this?
As the drama over the deal has unfolded, several of Twitter’s senior employees have left the company (some of their own volition). Two top executives, Kayvon Beykpour and Bruce Falck, were ousted on May 12. Twitter also froze hiring and implemented budget cuts last week. Three more senior employees departed May 17: Ilya Brown, the company's vice president of product management, Katrina Lane, vice president of Twitter Service, and Max Schmeiser, head of data science, left the company on Tuesday for other opportunities, though Brown tweeted that his departure has nothing to do with Musk’s takeover.
Twitter is also reportedly preparing for a potential exodus of employees, many due to their criticisms of Musk's ideas to implement a more hands-off approach to content moderation.
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.
