The Twitter board had reached the end of the road.
It was April 24th. Ten days earlier, Elon Musk, the world’s richest man, had made an unsolicited offer to buy Twitter for $ 54.20 a share. Alarmed by the unexpected offer and unsure whether the offer was real, the social media company adopted a “poison pill”, a protective maneuver to stop Mr. Musk from accumulating more of its shares.
But by that Sunday, Twitter had no choice. Mr. Musk had arranged funding for his offer and was annoying the company with his tweets. And after hours of discussions and a review of Twitter’s plans and finances, the questions the 11 board members struggled with – could the company cost more than $ 54.20 a share? will another participant appear? – all led to an unsatisfactory answer: No.
Less than 24 hours later, the $ 44 billion blockbuster deal was announced.
“What I’m going to tell you is that based on the analysis and perception of risk, security and value, the board unanimously decided that Elon’s offer was the best value for our shareholders,” said Brett Taylor, chairman of Twitter. in front of the company more than 7,000 employees on Monday in a conversation that The New York Times listened to.
A major mystery in Mr. Musk’s acquisition of Twitter is how the company’s board went from installing a poison pill to agreeing to sell it in just 11 days. In most mega-deals, taking a poison pill leads to a long battle. Tactics are a clear signal that a company intends to fight. Then the negotiations drag on. Sometimes buyers go away.
But interviews with a dozen people close to the deal who were not authorized to speak in public show how few opportunities the Twitter board had.
And while there are many types of buyers that deal advisers are willing to turn away from – hostile, aggressive, low-spirited and then willing to negotiate – Twitter has faced a buyer in Mr Musk who was not in no book of deals. He was essentially an “unknown quantity” purchaser, one who would not budge from the price and was willing to ruin the company in public and use his substantial fortune to reach a limited diligence agreement.
“Normal shoppers might actually say, ‘Well, you know, we actually want to talk to the people inside and see how the business is going and get more data than is available to the public,'” said Edward Rock, a professor of corporate governance. at New York University School of Law. “What was interesting,” he said, was that the Twitter board “made a deal in a short period of time – and such an unconditional deal.” He called the speed of the deal “unusual.”
Twitter declined to comment on the discussions on board. Mr Musk did not respond to a request for comment.
The deal was laid in January, when Mr Musk began buying shares on Twitter, eventually amassing more than a 9% stake in the company. When he announced his asset filing in early April, Twitter offered him a seat on the board. Mr. Musk briefly agreed with the idea before changing his mind.
Instead, on the evening of April 13, Mr. Musk sent a text message to Mr. Taylor, who has been chairman of Twitter since 2016. (Mr. Taylor is also CEO of software company Salesforce.)
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Comment by Times Opinion authors and columnists on the billionaire’s $ 44 billion deal to buy Twitter.
“I will send you a letter with an offer tonight, it will be public in the morning,” Mr. Musk wrote to Mr. Taylor. The stock exchange was involved in the submission of securities.
The next morning, a literal letter arrived with a suggestion from Mr. Musk. He said he intended to buy Twitter for $ 54.20 a share, but there were few details about his plans for the company or funding.
Mr Musk hired Morgan Stanley Investment Bank, using the services of two bankers, Anthony Armstrong and Michael Grimes. Mr. Grimes, who heads Morgan Stanley’s technology banking practice, led the public offering of shares on Facebook and other technology companies in 2012, while Mr. Armstrong was a longtime technology banker who was recently promoted to vice president of technology. the company.
The Twitter board did not know how to deal with Mr Musk’s offer, people familiar with the discussions said. Mr Musk had no experience in buying companies and did not follow some deals, including one in 2018, when he tweeted that he would take his carmaker Tesla, a private one, but then failed to do so.
A day after Mr Musk’s offer went public, the Twitter board voted unanimously to delay it by allowing the poison pill. To defend himself, Twitter turned to Goldman Sachs, its longtime banker, and JPMorgan Chase. For legal advice, he added the law firm Simpson Thacher & Bartlett to complement his long-standing law firm Wilson Sonsini.
JPMorgan declined to comment. Morgan Stanley, Goldman Sachs and Simpson Thacher did not comment immediately.
Mr. Musk was not embarrassed. His bankers have begun trying to withhold tens of billions of dollars in funding for a Twitter deal. His advisers presented the future creditors with several pages that vaguely outlined Mr. Musk’s goals. The billionaire also spoke directly with the banks, said a person familiar with the calls.
This helped convince Citigroup, Bank of America, BNP Paribas and other banks to invest their money. Despite the lack of details about Mr Musk’s plans, creditors have been reassured in part by the entrepreneur’s previous successes and wealth, the man said.
Mr Musk also campaigned on Twitter for a deal. He hinted that he would take his offer directly to shareholders in a so-called tender offer if the company’s board did not accept his offer. On April 16, he tweeted, “Love me tenderly.” Three days later, he tweeted “____ is the night”, a reference to F. Scott Fitzgerald’s novel “The night is tender”.
The Twitter dashboard broke. On April 16, Jack Dorsey, founder of Twitter, who resigned as CEO in November and is a member of the board, tweeted that the board was “the company’s constant dysfunction.” Asked by a Twitter user if he was allowed to say so, Mr Dorsey said no.
Mr Dorsey’s criticism has angered other board members and Twitter executives, said two people who worked on the deal. Mr Taylor asked Mr Dorsey to stop tweeting negatively, one man said. Mr Dorsey continued to post links to the Twitter board.
A spokesman for Mr Dorsey declined to comment. A spokeswoman for Mr Taylor declined to comment.
On April 21, Mr. Musk secured $ 46.5 billion in funding. He received commitments from Morgan Stanley and other creditors for $ 13 billion in debt financing, while another group of banks promised $ 12.5 billion in loans against his shares in Tesla. Mr Musk added that he would use another $ 21 billion in cash to buy the rest of Twitter’s capital.
Funding has forced the Twitter board to take Mr Musk seriously. No other offers for the company have emerged, said two people familiar with the discussions.
How Elon Musk bought Twitter
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Blockbuster deal. Elon Musk, the richest man in the world, limited what seemed to be the incredible billionaire’s attempt to buy Twitter for approximately $ 44 billion. Here’s how the deal went:
The initial offer. Mr Musk has made an unwelcome bid of more than $ 40 billion for the influential social network, saying he wants to make Twitter a private company and wants people to be able to speak more freely on the service.
On Twitter, Mr Taylor weighed the uncertainty of employees and the public implications of the deal against the trustee’s fiduciary duty, people familiar with the situation said. This meant making a decision based on whether Twitter could reasonably achieve a value better than what Mr. Musk suggested.
Mr Taylor and other board members discussed whether the outlook for users and Twitter’s revenue growth was realistic. The San Francisco-based company, which had not made a profit in eight of the past 10 years, had set aggressive business goals.
Initially, Twitter also took advantage of the pandemic, attracting new users and sending shares to more than $ 77 in February 2021. But its advertising business lagged behind that of competitors, and as the pandemic boom subsided, its shares fell below $ 40.
Still, some board members feared invading a rescue figure like Mr. Musk, especially since Twitter was already relying on such figures – including Mr. Dorsey – to straighten the ship, two people said.
Mr Musk has begun preparing to launch a tender offer on Twitter, said a source close to the discussions. He had a potential ally on the Twitter board of Egon Durban, co-CEO of private investment firm Silver Lake, who had worked with Mr. Musk on his failed 2018 efforts to make Tesla private. But Mr Durban has made it clear on board that Silver Lake is not teaming up with Mr Musk to secure funding for the takeover, two people said.
A spokesman, Mr Durban, declined to comment.
Last Saturday, Mr Musk spoke with Mr Taylor and threatened to take his offer directly to Twitter shareholders without explicitly saying he would launch a hostile offer, said a person familiar with the call.
On Twitter, the Twitter board concluded that it needed to make a deal with Mr Musk. The company could not reach $ 54.20 per share alone, board members agreed, and no white knight came.
Mr Taylor told Mr Musk that Twitter would continue to sell, said a person familiar with the call. However, Mr Musk sent a letter to Mr Taylor, threatening a hostile offer.
Twitter advisers have focused on protecting the deal, such as a break-up fee if Mr Musk leaves and a six-month deadline to close the deal, which could be particularly important if technology stocks continue to fall. Mr. Musk’s advisers have clarified details about the financing with the billionaire …
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