How Twitter’s Board Went From Fighting Elon Musk to Accepting Him

Twitter’s board reached the end of the road.

It was April 24th. Ten days ago, the world’s richest man, Elon Musk, made an unsolicited bid to buy Twitter at $ 54.20 per share. Frightened by the out-of-the-blue proposal and uncertain about whether the offer was real, the social media company resorted to a “poison pill”, a defensive maneuver, to stop Mr. Musk by accumulating more of its shares.

But by that Sunday, Twitter’s choices were over. Mr. Musk prepared credit for his offer and needed company with his tweets. And after hours of discussions and a review of Twitter’s plans and finances, the 11 board members were wrestling with the question – could the company be worth more than .20 54.20 per share? Will another bidder emerge? – All were leading to an unsatisfactory answer: no.

Less than 24 hours later, a blockbuster $ 44 billion deal was announced.

“What I will tell you is that based on the analysis and perception of risk, certainty and value, the board unanimously decided that Elon’s offer represents the best value for our shareholders,” said Brett Taylor, chairman of Twitter. On Monday, more than 7,000 employees heard a call from The New York Times.

The central secret of Shri. Musk’s Twitter acquisition is how the company’s board agreed to sell the poison pill in just 11 days after it was installed. In most megadells, the adoption of the poison pill leads to a long fight. The trick is a clear indication that the company wants to go to war. Pull out after negotiations. Sometimes buyers walk away.

But interviews with a dozen people close to the transaction, who were not authorized to speak in public, show how few options Twitter’s board had.

And while there are many types of buyers who are willing to resist bargaining chips – hostile people, aggressive people, who are willing to lower the bar and then negotiate – Mr. Musk which was not in any deal playbook. In essence, he was the acquirer of an “unknown quantity” that would not reduce the price and was willing to throw the company in the trash in public and use his considerable fortune to contract with limited diligence.

“Ordinary buyers can really say, ‘Well, you know, we really want to talk to the insiders and see how the business is doing and get more data than is available to the public,'” Edward Rock said. “What’s interesting,” he said, “is that the Twitter board was able to strike a deal in a short period of time – and such an unconditional deal.” He described the pace of the deal as “unusual.”

Twitter declined to comment on its board discussions. Mr. Musk did not respond to a request for comment.

The foundation for the deal was laid in January, when Mr. Musk began buying Twitter stock, eventually gaining more than 9 percent stake in the company. When he announced his holdings in the securities filing in early April, Twitter offered him a board seat. 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 the co-chief executive of the software company Salesforce.)

“I will send you an offer letter tonight, it will be announced this morning,” Mr. Musk wrote a letter to Mr. Taylor. The exchange was involved in filing securities.

The next morning, a very heartfelt offer letter came from Mr. Musk. He announced his intention to buy Twitter at $ 54.20 per share, but had little details about the company or its plans for financing.

Mr. Musk hired investment banker Morgan Stanley, tapping into the services of two bankers, Anthony Armstrong and Michael Grimes. Mr. Grimes, who heads Morgan Stanley’s technology banking practice, led the public stock offering of Facebook and other tech companies in 2012, while Mr. Armstrong was a longtime tech banker who was recently promoted to vice chairman of the company.

The Twitter board did not know exactly how to handle Mr. Kasturi’s dialect, said people familiar with the discussion. Mr. Musk did not have a track record of buying companies and did not follow through on some deals, including one in 2018 when he tweeted that he would take his car maker, Tesla, privately but then did not.

A day later Mr. Musk’s bid went public, with Twitter’s board unanimously voting to authorize the poison pill to slow it down. To defend himself, Twitter turned to Goldman Sachs, its longtime banker and JPMorgan Chase. For legal advice, he added legal firm Simpson Thatcher and Bartlett to complement his longtime legal firm, Wilson Sonsini.

JPMorgan declined to comment. Morgan Stanley, Goldman Sachs and Simpson Thatcher did not immediately comment.

Mr. Musk was underrated. Its bankers began trying to get billions of dollars in financing for the Twitter deal. His advisers were Mr. Musk’s goals. The billionaire also spoke directly to the banks, said a person familiar with the calls.

He helped persuade Citigroup, Bank of America, BNP Paribas and other banks to put their money. Despite the lack of details about Mr. Musk’s plans, the lenders were partly reassured by the entrepreneur’s past successes and wealth, the person said.

Mr. Musk also campaigned on Twitter for the deal. He indicated that if the company’s board did not accept his bid, he would take his proposal directly to the shareholders in the so-called tender offer. On April 16, he Tweeted“Love me.” Three days later, he Tweeted F. Scott Fitzgerald’s novel, “Tender is the Night” refers to “____ is the night.”

Twitter’s board broke. On April 16, Jack Dorsey, the founder of Twitter who left the post of chief executive in November and is a member of the board, Tweeted That board was “the company’s constant inactivity.” When asked by a Twitter user if he was allowed to say that, Mr. Dorsey replied, “No.”

Mr. Dorsey’s remarks numbered other board members and Twitter executives, according to two people working on the deal. Mr. Taylor asked Mr. Dorsey should stop tweeting negatively, one person said. Mr. Dorsey continued Posting References On the board of Twitter.

Planned for Mr. Dorsey declined to comment. Shri’s spokesperson. Taylor declined to comment.

On April 21, Mr. Musk lent $ 46.5 billion. It received $ 13 billion in debt financing commitments from Morgan Stanley and other lenders, while another group of banks pledged $ 12.5 billion in loans against its stock in Tesla. Mr. Musk added that it would use an additional $ 21 billion in cash to buy the remaining equity of Twitter.

Financing to Twitter’s board Musk seriously. “No other offers have come out for the company,” said two people familiar with the matter.

On Twitter, Mr. Taylor weighed in on the social impact of the deal against employee uncertainty and the board’s fiduciary duty, people familiar with the situation said. That means Twitter Mr. Musk was put forward.

Mr. Taylor and other board members discussed whether Twitter’s user and revenue growth prospects were real. The San Francisco Company, which has not made a profit in eight of the last 10 years, has set aggressive business goals.

Twitter also initially benefited from the epidemic, which increased the number of new users in February 2021 and sent its stock to over $ 77. But its advertising business lagged behind its competitors, and as the epidemic escalated, its shares fell below $ 40.

However, some members of the board were wary of having a savior like Mr. Musk swaps in, especially since Twitter already relies on such statistics – including Mr. Dorsey – To get the ship right, two people said.

Mr. Musk began preparing to launch a tender offer for Twitter, a source close to the discussion said. Egon was his potential partner on Twitter’s board in Durban, the co-chief executive of the private equity firm Silver Lake, who worked with Mr. Musk on his failed 2018 attempt to privatize Tesla. But Mr. Durban made it clear to the board that Silver Lake was not teaming up with Mr. Musk will provide funding for the takeover, two people said.

Through a system, Mr. Derby declined to comment.

Last Saturday Mr. Musk talked to Mr. Taylor and his offer threatened to take Twitter shareholders directly, without explicitly stating that he would initiate hostile bids, a person familiar with the call said.

On Sunday, Twitter’s board concluded it would have to make a deal with Mr. Musk. The company could not hit $ 54.20 per share on its own, board members agreed, and no White Knight was coming.

Mr. Taylor told Mr. Musk or Twitter will go ahead with the sale, said a person familiar with the call. However, Mr. Musk sent a letter to Mr. Taylor threatens a hostile bid.

Twitter’s advisors went home on protection for the deal, such as a breakup fee if Mr. Musk is gone and a six-month deadline to close the deal, which could be especially important if technology stocks continue to decline. Mr. Musk’s advisers shared the details of the loan, with the billionaire signing each issue individually, said a person familiar with the negotiations.

After the contract was announced on Monday afternoon, Mr. Kasturi claimed victory.

“Yes !!!” He tweeted, posted emojis of rockets, stars and hearts.

Anupreeta Das, Maureen Farrell And Kate Conger Contribution Report.

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