This is the first of a 2-Part post that focusses on Musk’s acquisition of Twitter. Please click here for Part 2
I have been a Tweeter for some time (notwithstanding a frustrated exit during the Trump Twitter years). It has never been a perfect platform – and has too often been a place for extreme views. I’ve frequently felt uncomfortable on Twitter too – with responses to posts ranging from insulting to illegal; however, Twitter’s regular purges helped keep the platform on an even keel.
I never anticipated things would unravel so quickly. So let’s take a look at what precisely happened.
In 2017, Elon Musk first demonstrated interest in buying Twitter. It was an unreciprocated love interest of some 5 years culminating in Musk’s offer of $44bn for the firm.
Interestingly, In 2022, Musk stated with hindsight that “I was (obv) joking at the time, but fate loves irony” (sic). If this was, in reality, a joke, then perhaps an amount of pride from that early exchange wouldn’t permit Musk to do anything else.
Musk began his manoeuvers on 4th April, 2022 (impact highlighted below) by purchasing a 9.2% stake in Twitter through a $3bn share purchase. Twitter stock (TWTR) rocketed by more than 25%, before falling back to 21% at the end of the trading day:
Prior to the share Purchase, Musk had been highly critical of Twitter, declaring that he may set up his own Social Media company. The sceptical among us may believe this was an attempt to downgrade the share price prior to purchase. On 5th April, Musk was granted a seat on the Executive Board, which he rejected on 10th April, increasing mistrust between the two parties.
As a response, on 15th April, 2022 Twitter adopted a “poison pill” approach whereby shares were issued for sale at a discount, with the objective to dilute the value of Musk’s holdings. This was a direct result of opposition from the Board – and many Twitterati – to Musk’s manoeuvres. Only the day before, Musk had offered to buy Twitter for $41bn.
This offer was subsequently upgraded to $44bn, an offer which Twitter’s board accepted on 25th April, 2022.
This was an unusual turnaround for the Twitter Board, to go from a “poison pill” approach to a sale agreement in the space of 2 weeks. But Twitter had run out of options – shareholders were eyeing the price, and Musk had already secured financing for the purchase.
On 13th May, 2022 Musk announced that the aforementioned deal was suspended “pending details supporting calculation (sic) that spam/fake accounts … represent less than 5% of users”.
Weeks of mud-throwing ensued (on Twitter, of course) as Musk challenged the number of fake accounts on the platform.
This culminated in Musk withdrawing his $44bn offer to buy the company on 8th July, 2022.
On 8th July, 2022 Bret Taylor (Chairman of Twitter’s Board of Directors) responded that legal action would be taken to enforce the agreement with Musk. Court filings laid bare the animosity between Twitter and Musk, with accusations made by the former that Musk was acting in “bad faith” and treating the process as an elaborate joke.
But why would Twitter, which was hitherto hostile to a Musk takeover, want to force Musk to buy the company? They could have simply walked away at this point. The reason might be the fact that Twitter’s share price would be severely damaged through Musk’s continuing sniping at the platform, and its supposed abundance of fake accounts. At this stage, the original deal would have been increasingly attractive to the board.
The Court Date was set for 17th October, 2022. Twitter successfully argued in Delaware that the court case should be fast-tracked, as the “cloud of uncertainty” that was hanging over Twitter Could damage the company – effectively torpedoing Musk’s own court bid to have the court case delayed.
At this point, we should ask ourselves how you would feel if we were in Musk’s shoes. From someone who stated they “loved Twitter” to someone – albeit having been responsible for the bulk of the shenanigans – now being sued by the Company to force you to buy in. These circumstances certainly could not bode well for the future…
In the background, things were not going well for Musk in other areas. Tesla’s share price was falling due to Musk’s ongoing focus on Twitter (how could he run Tesla and spend so much time on the Twitter deal?); he was involved in an ongoing tussle with the SEC because of previous Tweets; and now he was facing a court battle. It is unsurprising then, that Elon wanted to avoid the additional attention a court appearance would cause.
On 4th October, Musk agreed that he would buy Twitter at the original stock price of $54.20/share. This had an immediate impact on the stock’s price, which rocketed after the announcement (highlighted below).
The court set a date of 28th October, 2022 for Musk to complete his purchase. On 28th October, Musk announced the “bird is freed”, indicating that he had completed the purchase.
By now, might you be inclined to be somewhat vengeful after you had been forced in court to honour an original offer?
The Twitter board was sacked including, of course, Brett Taylor – the chair of the board of directors who instigated the court proceedings.
On the same day, Twitter’s shares were removed from the Stock Exchange as Twitter began its transition to a privately held company. Twitter Stock finished trading at $53.70/share. This was under the price Musk offered to buy the company at, but not by a large margin.
But what transpired since was to be much worse, and rarely have we seen such flagrant displays of corporate self-harm (the closest I can think of is Gerald Ratner’s “crap” comment in 1992).
Part 1 Conclusion
This was an extraordinary and contemporary saga – being played out for all to see on the Twitter Platform. What started off as a spontaneous Tweet (by the now self-styled “Chief Twit”) in 2017 resulted in public mud-slinging, a court case, and the forced purchase of one of the most valuable technology companies.
The fact that statements made on social have become a public record of people’s opinions and mindsets tracked through time (and that can be used against them) is fascinating.
It also starkly illustrates how a notorious public figure can spend billions on a personal quest – and change how the majority of us use Social Media over a small number of months.
Part 2 of this article will discuss what has happened since.
Please click here for Part 2
This post is a personal opinion and in no way reflects the opinion of anyone I work for
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