Twitter’s board of directors did everything they could.
It was April 24. ten days before, Elon Musk, the world’s richest man, made an unsolicited offer to buy Twitter for $54.20 a share. The social network, alarmed by the unexpected proposal and not knowing if the offer was real, opted for the “poison pill” strategy, a defensive maneuver to prevent Musk from accumulating more shares.
But for that Sunday, Twitter he was running out of options. Musk had secured financing for his offer and was pressuring the company through tweets. After hours of discussions and reviewing Twitter’s plans and finances, the questions the eleven members of the board of directors were asking themselves (Could the company be worth more than $54.20 a share? Will anyone offer more?) seemed to have an unsatisfactory answer: No.
Less than 24 hours later, the $44 billion deal was announced.
“What I will tell you is that based on analysis and perception of risk, certainty and value, the board unanimously decided that Elon’s offering represented the best value for our shareholders,” Bret Taylor, president of Twitter, to the company’s more than 7,000 employees in a call heard by The New York Times.
A key mystery about how Elon Musk bought Twitter is how the company’s board of directors went from doing everything possible to prevent the sale to accepting it in just eleven days. In most multi-million dollar transactions, this strategy leads to a protracted fight. The tactic is a clear sign that a company intends to fight back. The negotiations drag on. Sometimes buyers back out.
However, interviews with several people who were closely familiar with the transaction, and who were not authorized to speak publicly, detail how few options the Twitter board had.
Twitter declined to comment on his council’s discussions. Musk did not respond to a request for comment.
The groundwork for a deal was laid in January, when Musk began buying shares of Twitter, eventually owning 9 percent of the company’s shares. When he disclosed his stake in the company through a values statement in early April, Twitter offered him a seat on the board of directors. Musk accepted the idea for a short time before changing his mind.
After turning down the offer, on the night of April 13, Musk sent a text message to Taylor, who has been the CEO of Twitter since 2016 (and who is also co-CEO of the software company Salesforce).
“I am going to send you an offer letter tonight, it will be public in the morning,” Musk wrote to Taylor.
The exchange was listed in a securities statement.
The next morning, Musk sent out a basic offer letter. In it, he stated his intention to buy Twitter for $54.20 a share, but contained few details about his plans for the company or the financing.
Musk hired the investment bank Morgan Stanley and used the services of two bankers: Anthony Armstrong and Michael Grimes. Grimes, who heads Morgan Stanley’s tech banking practice, led the public offering of Facebook and other tech companies in 2012, while Armstrong was a veteran tech banker who was just named the company’s vice president.
Twitter’s board of directors wasn’t quite sure how to handle Musk’s offer. The tycoon had no history of buying companies and had reneged on some deals, including one in 2018 when he tweeted that he would take his automaker, Tesla, off the stock market without going through with it.
A day after Musk’s offer was made public, Twitter’s board of directors voted unanimously to stop it and authorized the poison pill stunt to go ahead. To defend itself, Twitter turned to Goldman Sachs, its longtime banker, as well as JPMorgan Chase. For legal advice, it incorporated the Simpson Thacher & Bartlett law firm as a complement to Wilson Sonsini, the law firm that the company has always had.
JPMorgan declined to comment. Morgan Stanley, Goldman Sachs and Simpson Thacher had no immediate comment.
Musk was not intimidated. His bankers began trying to raise tens of billions of dollars in financing for a Twitter deal. His advisers presented prospective lenders with a few pages vaguely outlining Musk’s goals. The billionaire also spoke directly to the banks, a person with knowledge of the calls said.
That helped convince Citigroup, Bank of America, BNP Paribas and other banks to put up the money. Despite the lack of details about Musk’s plans, lenders were reassured in part by the businessman’s past successes and wealth, the person revealed.
Musk also campaigned on Twitter for a deal. He hinted that he would take his proposal directly to shareholders in what he called a tender offer if the company’s board did not accept his offer. On April 16, he tweeted: “Love me tender,” the title of Elvis Presley’s song, in a play on words that alluded to the public offering. Three days later, he tweeted “____ is the Night,” a reference to the F. Scott Fitzgerald novel “Tender Is the Night.”
Twitter’s board of directors is fractured. On April 16, Jack Dorsey, one of Twitter’s founders who stepped down as CEO in November and is a member of the board, tweeted that the board had been the “constant dysfunction of the company.” Asked by a Twitter user if he was authorized to say that, Dorsey replied, “No.”
Dorsey’s criticism angered other council members and Twitter executives, two people who worked on the deal said. A source revealed that Taylor asked Dorsey to stop posting negative tweets. Dorsey continued to post references to Twitter’s board of directors.
How will Elon Musk seek to make Twitter more profitable?
Neither Dorsey’s nor Taylor’s spokesman would comment.
On April 21, Musk raised $46.5 billion in financing. He secured the promise of $13 billion in debt financing from Morgan Stanley and other lenders, while another group of banks pledged $12.5 billion in loans backed by his shares in Tesla. Musk added that he would use another $21 billion in cash to buy the rest of Twitter’s stock.
The funding forced Twitter’s board of directors to take Musk seriously. Two sources familiar with the negotiations mentioned that there was no other offer for the company.
On Twitter, Taylor weighed employee uncertainty and the social implications of a deal against the board’s fiduciary duty, according to comments from people with knowledge of the situation. That meant making a decision based on the possibility that Twitter could reasonably come up with a better number than the one Musk put on the table.
Taylor and other council members debated whether Twitter’s user and revenue growth prospects were realistic. The San Francisco company, which had not turned a profit in eight of the past ten years, had set itself aggressive business goals.
Also, early in the pandemic, Twitter had benefited, attracting a surge of new users and sending its shares soaring to more than $77 in February 2021. But its advertising business lagged behind those of its peers. competitors, and when the momentum of the pandemic wore off, its shares fell below $40.
Still, some board members were wary that a savior figure like Musk would pounce on the company, especially since Twitter had already relied on such figures (including Dorsey) to turn the tide, two sources said.
Musk has started preparing to kick off Twitter’s takeover bid, a person with knowledge of the negotiations said. He had a possible ally on the social network’s board of directors, Egon Durban, a co-CEO of private equity firm Silver Lake, who had worked with Musk on his failed 2018 effort to delist Tesla. bag. However, Durban made it clear to the council that Silver Lake was not partnering with Musk to offer funding for a takeover, two people said.
Through a spokesman, Durban declined to comment.
Last Saturday, Musk spoke with Taylor and threatened to take his offer directly to Twitter shareholders, without explicitly saying he would initiate a hostile bid, a person with knowledge of the call said.
For Jack Dorsey, Elon Musk “is the only solution” for Twitter
On Sunday, Twitter’s board of directors concluded that it had to enter into the deal with Musk. Board members agreed that the company would not be able to reach $54.20 a share and that no Prince Charming would come to its rescue.
Taylor told Musk that Twitter would proceed with a sale, according to a person with knowledge of the call. Still, Musk sent Taylor a letter in which he threatened to resort to a hostile offer.
Twitter advisers focused on protections for the deal, such as paying a penalty if Musk decided not to make the purchase and a six-month window to close the deal, which could be especially important in the event of a deal. Tech stocks continue to fall. Musk’s advisers finalized the financing details and the billionaire personally approved each item, a person familiar with the negotiations said. (YO)
Source: Eluniverso
Paul is a talented author and journalist with a passion for entertainment and general news. He currently works as a writer at the 247 News Agency, where he has established herself as a respected voice in the industry.
