How Elon Musk Won Twitter

His weeks-long pursuit of the company has resulted in a $44 billion deal. But how did it happen, and what the hell comes next?

Elon Musk became the new owner of Twitter on Monday, after completing a stunning $44 billion takeover of the social media platform, ending a process that has vacillated between a done deal and dead in the water in the last three weeks.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a press release announcing the news. Twitter independent board chair Bret Taylor described the deal as “the best path forward” for the company’s shareholders.

The result ends prolonged speculation over Musk’s financial interest in Twitter. On April 4, the entrepreneur’s 9.2 percent stake in the company—or 73.5 million shares at a cost of around $2.4 billion—was disclosed to the public. At the time, the purchase of stock in Twitter came with an offer to sit on the board—though on April 10 Musk declined to take his seat.

He soon made it obvious that he wanted the whole thing. On April 14, Musk offered to buy the remaining percentage of the company for $54.20 per share—a 38 percent premium on the price he paid for his initial investment. Musk’s accompanying letter to the chair of Twitter’s board was strident in its criticism of the platform. “I believe in [Twitter’s] potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” he wrote. However, he added, “I now realize the company will neither thrive nor serve this societal imperative in its current form.”

Instead, he wanted to take the company private, offering $44 billion for it in a “best and final” offer. At the time, analysts were split about the likelihood of Musk’s bid succeeding, and whether it was good value; while it sat in the middle of the usual 30 to 40 percent premium above the trading price, the stock price had reached well above that just last year. Twitter’s board, for its part, said it would evaluate the offer.

“He’s setting a bit of a precedent for activists that will go after a company,” says Timothy Galpin, senior lecturer in strategy and innovation at the Said Business School at the University of Oxford. “It’s been done a bit before by Carl Icahn and a few others, but it’s not as prevalent to go after the whole company.”

On the same day that he lodged his bid to take over the entirety of Twitter and take it private, Musk appeared at a TED talk in Vancouver, where he laid out his vision. “This is not a way to sort of make money,” he claimed. “My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important.” That gave some within Twitter, and those who held large shares in the platform, pause.

Contemporary reports indicated Twitter would fight to repel Musk, while the Tesla and Space X CEO got into a Twitter spat about press freedom with Saudi Arabia’s Kingdom Holding Company, a major shareholder that said it would reject Musk’s offer. (Saudi Arabia has been accused of the murder of journalist Jamal Khashoggi.)

Such social media battles may be unusual when considering a takeover of a massive business, but Musk is himself unusual, says Cary Cooper, a business professor at Manchester Business School. “He’s not a traditional businessman,” he says. “He’s a man that is pretty creative and pretty innovative. He’s a unique guy and does things in a way that a normal businessperson wouldn’t do. He doesn’t play the normal games that an entrepreneur would play.”

On April 15, Twitter’s board triggered a break-glass-in-emergency financial tool: the poison pill. Also known as a limited duration shareholder rights plan, the poison pill invited shareholders to increase their investments in Twitter in order to reduce Musk’s ability to build his stake up into a controlling one. Any attempts to take his share over 15 percent would require Musk to negotiate with Twitter’s board.

Triggering the poison pill headed off the speedy hostile takeover, but Musk’s offer never left the table. On April 21, Musk outlined how he’d come up with the $44 billion in cash required to fulfill his bid. Morgan Stanley and other firms offered to back Musk’s bid, while he’d pay around $21 billion from his own estimated $263 billion fortune. The filing put meat on the bones of what had previously been a speculative offer—and indicated how seriously Musk wanted to take Twitter private.

The confirmed funding reportedly caused some of Twitter’s shareholders who were more agnostic about Musk to petition the company to hear him out. Meetings reportedly took place over the weekend, and Twitter’s board met on April 25 to recommend the deal to shareholders. It was a swift and surprising reversal. “On Friday, there was so much skepticism and cynicism, and now it almost looks like a done deal,” says Vasant Dhar, a professor of information systems at NYU Stern. Musk’s quick movements have left other potential bidders stuck playing catchup. But the deal appears to have passed the money test, at least for Twitter’s board of directors, since “the board’s fiduciary responsibility is to get the most value for shareholders,” says Galpin. “Obviously, there are questions about what he’ll do with the company if he takes control of it. He’s got to do more than just add an edit button.”

Taking the company private would allow Musk to make the changes he wants far more quickly, without answering to public markets. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans,” Musk wrote in Monday’s press release.

“I think he’s played it brilliantly,” says Dhar. “One could have expected the reaction we got: ‘Musk is a megalomaniac and he’s doing it for self-promotion.’ But I actually think there’s a lot more to it than that.”

It’s possible that the purchase will come under regulatory scrutiny. While there’s unlikely to be an antitrust concern, the Securities and Exchange Commission could still take issue with Musk’s disclosures along the way. “You could ask a court to enjoin the deal on the basis that he has improperly filed,” says Pritchard. “He didn’t file his initial stake on a timely basis, then he filed the wrong form because he really had the intention of influencing management the whole time,” he suggests. That, however, would require showing the harm caused by those infractions. Shareholders could lodge private lawsuits but would likely only succeed in getting more money from Musk in the deal. And the SEC is unlikely to halt the transaction because of the damage that could do to shareholders.

It seems Elon Musk will almost inevitably assume control and ownership of Twitter—changing the face of the platform in the process. For some of Twitter’s millions of users, it’s a welcome development that gives them more freedom to say and do what they want. For others, it’s a worrying development with potentially chilling consequences. As for the shareholders, and Musk himself, things are looking rosy.

“Shareholders will feel like they’ve won, and Musk has got what he wanted,” says Galpin. “He’s got control of the company, for not an exorbitant price but not a cheap price either. Nobody really gouged the other one, and nobody lost.”

How Elon Musk Won Twitter

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