It’s official. After months of twists and turns and drama, Tesla CEO Elon Musk has decided to cancel his acquisition of Twitter. But if you’re asking yourself how we got here and wondering how this all started, you’re at the right place.
- Musk begins buying up Twitter shares in batches “almost daily”
- Musk announces 9% stake in Twitter
- Twitter offers him a seat on its board
- Vanguard Group reveals its larger stake
- Musk declines board seat offer
- Twitter investor files a lawsuit against Musk
- Musk offers to buy Twitter for $43 billion
- Twitter stock falls as Musk announces bid to buy Twitter
- Twitter’s board of directors mounts ‘poison pill’ strategy against Musk’s takeover bid
- Twitter confirms its ‘poison pill’ strategy via a new SEC filing
- A new SEC filing confirms Musk has secured funding for his Twitter bid
- Twitter begins talks with Musk and is expected to accept his $43 billion bid (for now)
- Twitter officially accepts offer of $44 billion
- Musk says Twitter acquisition is on hold over concerns about fake/spam bot accounts
- Musk tweets an apparent ultimatum regarding his acquisition of the bird app
- Musk threatens to abandon his Twitter takeover because of spam bot concerns
- Twitter reportedly plans to answer Musk’s threat with offer of access to its “firehose” data
- Musk officially cancels his acquisition of Twitter
The timeline below outlines all the main bullet points you need to know to make sense of this social media Succession-like situation.
January 31, 2022: While this story seems to have started in April, its beginnings really are rooted in January of this year. The Associated Press reports that regulatory filings showed that the Tesla CEO began buying Twitter shares on January 31 on an “almost daily” basis.
Though few took notice, it’s clear Musk had an early interest in building up his stake in Twitter.
April 4, 2022: All those shares Musk bought eventually added up to him having a 9% stake in Twitter. This stake was reported on April 4 in a regulatory filing. This is the point at which the story becomes public, because at the time, that 9% stake made Musk the bird app’s biggest shareholder. But keep reading, because that doesn’t last long.
It was also on this day that Musk put a poll on Twitter, asking his followers if they wanted an edit button.
Do you want an edit button?
— Elon Musk (@elonmusk) April 5, 2022
April 5 2022: Not long after Musk’s 9% stake in the company is announced, Twitter offers him a seat on its board. Twitter CEO Parag Agrawal announces Musk’s appointment to the board via a tweet on April 5.
The board seat offer came with a stipulation that Musk wouldn’t purchase more than 14.9% of Twitter’s remaining stock. Musk initially accepted this offer, saying he was looking forward to working with the team “to make significant improvements to Twitter.”
I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board.
— Parag Agrawal (@paraga) April 5, 2022
April 8, 2022: Regulatory filings showed that asset manager Vanguard Group reported on April 8 that it actually has a 10.3% stake in Twitter, which means Musk isn’t the biggest shareholder anymore.
April 9, 2022: Musk declines Twitter’s board seat offer. He was actually supposed to officially join the board that day, but instead chose not to join that morning, according to Twitter’s CEO.
April 10, 2022: The next day, Agrawal announces via a tweet that Musk had declined to join Twitter’s board. It was unclear initially why Musk chose not to join, but it seems his greater intentions were still in the works.
Elon has decided not to join our board. I sent a brief note to the company, sharing with you all here. pic.twitter.com/lfrXACavvk
— Parag Agrawal (@paraga) April 11, 2022
April 12, 2022: Twitter investor Marc Bain Rasella filed a lawsuit against Musk in a New York federal court. The lawsuit alleges the following:
- That Musk may have failed to report his Twitter share purchases to the Securities and Exchange Commission (SEC) on time (within 10 days), and because of that, investors who sold their shares and were unaware of Musk’s purchase potentially missed out on gains they could have gotten when his purchase became public on April 4, as the share value increased quite a bit then.
- It’s also alleged that his delay to disclose his stock purchase resulted in Musk saving $143 million at that time while buying Twitter stock at a lower price.
April 14, 2022: On April 14, Musk tweets that he made an offer to buy Twitter. The offer is for $43 billion, and Musk wishes to take the company private. Specifically, he wants to buy Twitter at $54.20 per share — that is his “best and final offer.”
According to a letter included within the SEC filing for the bid to buy Twitter, if the offer is not accepted, Musk said: “I would need to reconsider my position as a shareholder.”
I made an offer https://t.co/VvreuPMeLu
— Elon Musk (@elonmusk) April 14, 2022
April 14, 2022: Not long after Musk’s Twitter takeover bid was announced, Twitter’s stock fell.
And according to MarketWatch, it fell 1.7% to a price of $45.08, which is less than what Musk offered per share in his bid.
April 15, 2022: Twitter announced on April 15 that its board of directors would be employing a “poison pill” deterrent against Musk’s takeover bid. What’s a poison pill? It’s basically when the current shareholders of given company are allowed to purchase more shares at a discounted price to weaken the ownership interest of the person trying to take over (Musk).
According to Investopedia, there are different kinds of poison pill strategies, and the one we’ve just described (where you let all current shareholders buy discounted shares, except for the investor who’s trying to take over) is known as a “flip-in poison pill.” This strategy eventually results in the takeover becoming increasingly cost-prohibitive for the investor who wants to take over.
Twitter’s poison pill strategy is expected to kick in if Musk’s stake in Twitter increases to 15% or higher.
April 18, 2022: On April 18, Twitter filed a Form 8-K with the SEC, which confirms and further explains how it plans to execute the poison pill strategy announced on April 15.
As we mentioned earlier, the poison pill strategy Twitter is using involves allowing all current shareholders (except for Musk) to buy more shares at a discounted price. In this latest filing, that discounted price would be $210. The filing also confirms that the strategy will kick in if an “Acquiring Person” (like Musk) buys 15% or more of Twitter’s stock.
April 21, 2022: In a new filing, Musk confirmed on April 21 that he has secured funding for buying Twitter. The filing states that the total amount secured via various kinds of loans and equity financing is $46.5 billion. The filing also mentions that Musk is considering starting what’s known as a “tender offer.” That’s when current shareholders are invited to sell their stock to an investor at a particular price. In this case, Musk is considering a tender offer in which he would buy shareholders’ stock at $54.20 per share.
But it is important to remember, as Musk reminds everyone in this filing, that though he has secured funding and is considering a tender offer, that doesn’t necessarily mean a takeover will happen. Just that it is possible. And the filing also makes it clear that it is just as likely that it may not happen either, that Musk still “reserves the right to withdraw the proposal or modify its terms at any time including with respect to the amount or form of consideration.”
April 24-25, 2022: Mere days after Musk’s SEC filing confirms that he has the financing to support his plans to buy Twitter, the Tesla CEO began negotiations with Twitter on Sunday, April 24. Then, the very next day, it was reported by Reuters that the social media company is now expected to accept Musk’s bid at $43 billion.
However, Reuters’ sources on the matter also say that the deal could still “collapse at the last minute.” It’s also worth noting that the current version of the deal still allows Twitter to accept a bid from another buyer even after signing the deal with Musk. But in order to do so, Twitter will have to pay a “break-up fee” to Musk.
Twitter’s stock price appears to be responding positively to this latest development: As of this writing on April 25, it is over $50 per share and the price is trending upward.
April 25, 2022: Twitter has officially announced that the company has accepted Musk’s offer for $44 billion, making it one of the largest tech acquisitions in recent history. The acquisition takes the company private, and puts the future of the platform in Musk’s hands.
His first tweet since officially owning the company reads as follows:
🚀💫♥️ Yesss!!! ♥️💫🚀 pic.twitter.com/0T9HzUHuh6
— Elon Musk (@elonmusk) April 25, 2022
May 13, 2022: Via a tweet, Musk announces on May 13 that his acquisition of the bird app is “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” Twitter had reported that the percentage estimate of fake and spam accounts on its platform was less than 5% of all Twitter accounts. Musk’s tweeted announcement to put the deal on hold pending proof of that estimate, appeared to question the accuracy of that estimate and imply that the percentage could be higher than Twitter’s reported estimate.
But at this point, Musk appeared to still be in favor of the acquisition. He even issued a follow up tweet confirming his commitment to it.
Still committed to acquisition
— Elon Musk (@elonmusk) May 13, 2022
May 17, 2022: Musk takes to Twitter to again voice his concerns about the accuracy of Twitter’s own fake and spam accounts percentage estimates. On May 17, Musk replies to a tweet that shared a Teslarati article regarding the fate of Musk’s Twitter acquisition as it relates to those spam bot percentage estimates. Musk’s reply to this tweet essentially appeared to be an ultimatum: It alleged that Twitter’s reported percentage estimates may not be correct, demanded that Twitter CEO Parag Agrawal show him proof that Twitter’s reported fake/spam account percentage estimate of less than 5% is correct, and said the deal “cannot move forward until he does.”
20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.
My offer was based on Twitter’s SEC filings being accurate.
Yesterday, Twitter’s CEO publicly refused to show proof of <5%.
This deal cannot move forward until he does.
— Elon Musk (@elonmusk) May 17, 2022
June 6, 2022: So Musk tweeted an apparent ultimatum in May, and then on June 6 followed that up with an official letter to Twitter in which he accused the social media company of non-compliance with the terms of the merger agreement. Musk’s letter also includes a reminder of his right to end the acquisition and the merger agreement.
In terms of Twitter’s alleged non-compliance, the letter discusses yet again Musk’s concerns about the accuracy of Twitter’s reported percentage estimate of fake/spam bot accounts on its platform. Specifically, Musk has requested access to Twitter’s account data so he can “conduct his own analysis.” According to the letter, Twitter had not given access to the data Musk requested and instead offered explanations of its “own testing methodologies.”
Musk felt that Twitter’s offer was not sufficient and was basically a refusal to comply with the terms of their merger agreement, which the letter says includes a requirement on Twitter’s part to “provide data and information that Mr. Musk requests in connection with the consummation of the transaction.”
The letter concludes with the assertion that with Twitter’s alleged non-compliance with terms of the merger agreement, that Musk reserves the right to not buy the bird app and to end the merger agreement.
June 8, 2022: Two days later, The Washington Post reported that Twitter was now planning to comply with Musk’s data requests. In response to Musk’s request, Twitter reportedly was planning to grant access to its “full ‘firehose'” of data.
This “firehose” data is a massive amount of data which, according to the Washington Post, includes “not only a real-time record of tweets but the devices they tweet from, as well as information about the accounts that tweet.”
July 8, 2022: The Twitter acquisition saga appears to have come to an end … for now. Musk announced via SEC filings on July 8 that he was canceling his acquisition of the bird app. In a letter to Twitter announcing the end of his Twitter takeover, Musk’s reasoning behind his decision to end the acquisition is described as follows:
“… Mr. Musk is terminating the merger agreement because Twitter is in material breach of multiple provisions of that agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the merger agreement, and is likely to suffer a company material adverse effect (as that term is defined in the merger agreement).”
Furthermore, Musk still alleges that Twitter has not complied with its merger agreement obligations to provide the “data and information” he has requested.
But while Musk has officially announced his decision to cancel his acquisition of Twitter, Twitter is apparently still trying to push ahead with it. Twitter Chairman Bret Taylor tweeted that Twitter’s board still wanted to move forward with the deal as agreed and that it “plans to pursue legal action to enforce the merger agreement.”
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
It’s possible that the merger agreement could still be enforced and, as NBC News notes, Twitter “likely believes it would first be able to ask a judge to force Musk to purchase the company, under what is known as a “specific performance” clause.” So it may not be as simple as Musk just paying a $1 billion breakup fee to end the merger agreement.
So, stay tuned. The Twitter acquisition may be over, but ending it fully may take a while.
This story is constantly evolving. We will continue to update this article as more information becomes available.
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