Reporter Zhao Enting compiled
The American Tesla Automobile Company and Space Exploration Technology (SpaceX) founder Musk recently completed the acquisition of Twitter and officially took over the American social media giant on October 27. His first move after he took Twitter was to fire a number of executives, including CEO and Chief Financial Officer (CFO). Since Musk proposed to acquire Twitter in April this year, the deal has been negotiated and reached an agreement, Musk resigned, and Twitter sued it in court. The twists and turns over the past six months have attracted much attention, and now it has come to an end.
This is Musk's Twitter account. (Xinhua News Agency)
[The largest single shareholder plays with face change]
On October 26, Musk posted a video on Twitter, carrying a hand sink with a smile and walked into the headquarters building of Twitter's company in San Francisco, California, USA, with the caption: "let that sink in!" The English literal meaning is "put that sink in", which is actually expressing "clean up and settle your thoughts." He also changed the identity label information of his personal Twitter account to "Chief Twit", which means "Twitter leader".
Although Musk ranks the richest man in the world with a fortune of US$249.9 billion, it is mainly shares of Tesla and Space Exploration Technology, not cash. The purchase of Twitter for a purchase price of US$44 billion cannot be separated from the help of multiple financial institutions and individual investors. On October 24, Musk held a video conference with several banks that provided part of the funds, including seven financial institutions including Morgan Stanley, Bank of America, Barclays, Mitsubishi UFE Bank, etc., providing Musk with a total debt financing of US$13 billion.
As a "heavy user" of Twitter, Musk's number of fans exceeded 80 million in April this year, and by the end of June, this number exceeded 100 million, becoming the sixth user with a 9-digit number of fans in Twitter. While the number of fans grew rapidly, Musk also continued to buy Twitter stocks since the end of January this year, with the stock price at $36.83 per share at that time. By April 1, he had bought 9.2% of Twitter's shares, becoming the largest single shareholder of Twitter. Affected by the news that Musk held a stake in Twitter, Twitter's stock price rose more than 27% on April 4 and continued to rise 2.02% on April 5, closing at $50.98 per share.
This is the Twitter headquarters building located in San Francisco, USA. (Xinhua News Agency)
According to the Wall Street Journal, information submitted by the US Pioneer Group to the US Securities and Exchange Commission on April 8 shows that Pioneer holds 10.3% of the shares and is still the largest shareholder of Twitter; Musk is the second largest shareholder and the "individual shareholder" with the most shares. At that time, among the top ten shareholders of Twitter, only Musk and former CEO Dorsey, one of the seventh-ranked Twitter founder and former CEO, were owned by individual shares.
Twitter learned that Musk bought 9.2% of Twitter's stock, senior executives such as Agraval frequently spoke with him and posted an olive branch on April 5 - providing Musk with a Twitter board seat, but the shareholding ratio during his tenure shall not exceed 14.9%. According to Agraval and Musk's subsequent statement on Twitter, it seems that both sides are full of expectations for their future work. But a few days later, Musk announced on April 9 that he would give up joining the Twitter board, causing speculation that he would continue to increase his stake in Twitter and even acquire the company.
As expected, Musk announced on April 14 that he planned to acquire all Twitter shares in cash. He proposed a bid to acquire Twitter at a full price of $54.20 per share, with a total price of about $44 billion. He said he did not care whether Twitter made money and hoped to hold as much stake in Twitter as possible, but he was not sure whether it could be successfully acquired. In this regard, some industry insiders questioned that although Musk had rich assets, he lacked enough cash to complete the acquisition.
In order to organize Musk to significantly increase his holdings, the board of directors of Twitter unanimously decided to launch the "poison pill plan" to prevent malicious acquisitions and dilution of shares. According to the plan, if Musk acquires more than 15% of Twitter shares, other shareholders will be able to buy additional new shares at a discounted price, making Musk's equity diluted and the acquisition cost more.
On October 26, Musk moved a hand sink to the Twitter headquarters building (video screenshot). (Xinhua News Agency)
[Acquisition plot reversal and then reverse]
Musk himself admitted that he was not sure whether he had the ability to complete the acquisition. In his filings to the SEC, he said that if the offer is rejected, he would consider selling his Twitter shares. At the same time, Musk's competitors also appeared. The New York Post broke the news on April 14 that Thomas Bravo, a US private equity firm that mainly invests in technology, has contacted Twitter and is interested in making an offer. On April 18, the Wall Street Journal reported that US asset management giant Apollo Global Management is interested in providing financing support to help other parties acquire Twitter.
Musk claimed to raise US$46.5 billion for acquisitions, covering US$44 billion in acquisitions and related handling fees. Twitter's stock price rose accordingly. Twitter then changed its position and reached an acquisition agreement with Musk at the end of April. In addition to banks such as Morgan Stanley and Bank of America who promised to provide $13 billion in debt financing, equity investors such as Oracle co-founder Ellison and Saudi wealthy Prince Alexander also promised to invest $7.1 billion.
However, in May the plot suddenly became turbulent, and Musk temporarily stopped the acquisition plan and asked Twitter to release details on the number of spam and fake accounts. Meanwhile, Twitter's stock price fell sharply, with a market value of about $28 billion by early July. On July 8, Musk wrote to Twitter's board of directors, saying that he would terminate the acquisition agreement on the grounds that Twitter failed to comply with the contractual obligations and seriously violated several terms in the agreement. In response, Twitter Chairman Taylor said the company's board of directors plans to take legal action to implement the agreement.
htmlOn July 12, Twitter sued Musk, accusing him of refusing to acquire Twitter as a result of the company's huge losses. In response, Musk only wrote a sentence on his Twitter personal account: "Oh, the ironic LOL (laughing)." According to the acquisition agreement, the party responsible for the failure of the agreement will pay a liquidated damages of $1 billion. But Twitter did not want liquidated damages, but wanted Musk to complete the acquisition, which was ridiculed by the latter as a "forced sale". On the same day, Twitter's stock price closed at $34.06, up 4.3%, but is still far below the level of more than $50 after the acquisition agreement was reached at the end of April; Tesla's stock closed at $699.21 on the same day, down about 30% since the end of April, which means Musk's wealth shrinks.In April this year, Musk reduced his holdings of Tesla stock about $8.5 billion; in the week in early August, he reduced his holdings of Tesla stock about $6.9 billion. One important reason is that if he loses the lawsuit, he will have to acquire Twitter. In this way, Musk cashed out about $32 billion by selling Tesla shares in less than a year.
Twitter v. Musk was originally planned to open in the Delaware Equity Court on October 17, but the questioning session between lawyers of both parties was postponed at the end of September, indicating that the game between the two parties may turn around. According to the documents submitted by Twitter to the SEC on October 4, Musk wrote to the company the day before, saying that he would be willing to complete the acquisition according to the previous agreement as long as the trial was postponed. Subsequently, the Delaware Equity Court ruled on October 6 to suspend Musk's lawsuit with Twitter until October 28 so that both parties can complete the transaction during this period, otherwise the trial will be restarted in November. According to the Associated Press, most legal experts believe that the chances of winning in this case, Musk is not very good.
This is a photo of Musk and his personal Twitter account. (Xinhua News Agency)
[Dissolve the board of directors as its own CEO]
After Musk took over the Twitter company, he immediately dismissed former CEO Agraval, Chief Financial Officer Siegel, Director of Law and Policy Gad, General Counsel Egit and Chief Account Officer Pessonette. Musk accused these people of "misleading" himself and investors on the issue of "false accounts". Agraval had asked Musk to stop posting negative information on Twitter, while Gad was the decision-maker who banned former President Trump's Twitter account. However, Musk needs to pay them more than $200 million in compensation.
On October 31, Musk said that he would become the CEO of Twitter.On the same day, the Wall Street Journal reported that Twitter's board of directors had been dissolved and Musk became the company's sole director. Reuters reported that Musk has not disclosed specific information about the future development of Twitter, and what he said when he had previously conceived Twitter's prospects were either imaginative or contradictory.
Musk said on October 19 that Twitter's "long-term potential will be an order of magnitude higher than current value." However, Twitter is facing the problem of active user churn. Data shows that "severe users" account for less than 10% of Twitter's total monthly users, but it is the source of 90% of tweets and half of Twitter's global revenue. Musk once claimed to carry out drastic reforms to Twitter, including clearing "false accounts" and expanding "freedom of speech". But some worry that if Musk relaxes platform control, it may fuel hatred and extreme speech.
Former US President Trump
In addition, the outside world is also concerned about whether Musk will "release" the ban on former US President Trump. Trump was once a "heavy user" of Twitter. Twitter banned Trump's account on the grounds that Trump incited violence because his supporters violently stormed the Capitol on January 6 last year and tried to hinder Congress from certifying the election of Democrat Biden as president. Previously, Musk commented on the practice being "stupid", saying that he would overturn the decision after taking over Twitter. In response, Trump said on October 28 that he "likes Musk very much and wishes him good luck. I hope he can do it well." But he added that he will continue to stay on the "real social" platform he created, which is a "better and safer" social media platform where he feels "like at home".
Musk announced in 2019 that he "had aversion to advertising", but on the day of the acquisition, he "yelled" to advertisers: "Twitter is determined to become the most respected advertising platform in the world, which will broaden your brand influence and promote corporate growth." However, advertising industry insiders said that if Musk really let Trump return to Twitter, it may cause disgust of moderate and liberal users, thus keeping many mass brands away.
Previously, the Washington Post quoted people familiar with the matter as saying that Musk plans to reduce the size of Twitter employees after completing the acquisition, reducing the existing 7,500 employees to more than 2,000, that is, laying off nearly 75%. Musk denied this claim, but he had ordered layoffs. An investment company executive revealed that news from Musk's family office said about 50% of Twitter employees will be laid off. The Guardian website reported that the first round of layoffs is expected to affect 25% of employees.
It is reported that layoffs will be conducted before November 1 local time, and this date is the time when the company's layoffs plan to receive stock subsidies. Stock subsidies account for a large proportion of employees' salaries. Before this, layoffs are made, Musk will likely avoid spending stock shares and compensate by paying cash. Moreover, after completing the acquisition before the deadline, Musk was able to avoid trial or punishment.
(Source: Xinhua News Agency, China News Service, International Online, etc.)
