The CEO of Tesla is in the process of finalizing the acquisition of the social network for $44 billion.
This is the saga of the year in business circles.
A saga whose main protagonist is Elon Musk, the richest man in the world.
The saga has already had many twists and turns. To recap, Musk revealed on April 4 that he owns more than 9% of the microblogging website. He said that he would be a passive investor, meaning that he would not try to influence the company’s strategy.
But the next day, he changed his position and became an activist investor.
He signed an agreement with the company, which gave him a seat on the board of directors, in exchange for his promise not to acquire more than 14.9% of Twitter. A few days later, Musk canceled the agreement and launched an offer to buy the entire platform for $44 billion at $54.20 per share.
On And Off
On April 25, the two parties came to an agreement.
But almost three months later, on July 8, Musk abruptly withdrew his offer, explaining that Twitter had lied to him about the number of fake accounts on the platform.
On July 12, Twitter filed a complaint with the Delaware Chancery Court, asking the court to compel Musk to respect the initial commitment.
A 5-day trial was due to begin on October 17, but just under two weeks earlier, Musk announced on October 4 that he was putting his offer back on the table without changing the price, even as falling financial markets indicated a fair price below $44 billion.
Musk’s change of course came after an information-gathering process between the two parties that resulted in the publication of personal text messages from the billionaire with his tech bros, relatives and billionaire peers.
Chancellor Kathaleen McCormick has given Musk and Twitter until October 28 to finalize the deal. Things seem to be on the right track.
You can read our guide to the unconventional battle between Musk and Twitter here.
The billionaire just admitted publicly that he was overpaying for Twitter but he thinks he can unlock the platform’s potential.
“Obviously, myself and the other investors are obviously overpaying for Twitter right now,” Musk said during Tesla’s third quarter earnings’ call. “The long-term potential for Twitter, in my view, is, in order of magnitude, greater than its current value.”
The Twitter stock price is currently $51.83, a far cry from Musk’s $54.20 offer, despite the deal being more than likely to close.
Many experts expect Musk to sell additional Tesla shares to fund the acquisition.
The billionaire wants to use the social network to accelerate his project for a Chinese-style Super App offering multiple services.
“Buying Twitter is an accelerant to creating X, the everything app,” the billionaire posted on Twitter on October 4.
He had hinted that his vision for Twitter was comparable to what he envisioned for X, a financial services company he co-founded in 1999 in Palo Alto, Calif. X merged in 2000 with software company Confinity.com. The merged company became PayPal.
His model is WeChat, the Chinese app that mixes social media with payments, games, messaging, booking a flight ticket, ordering food, shopping etc.
“There’s no WeChat equivalent outside of China,” Musk told Twitter employees during an internal all-hands call on June 16. “You basically live on WeChat in China. If we can recreate that with Twitter, we’ll be a great success.”
“I am excited about the Twitter situation,” Musk said on October 19, adding that the platform has “sort of languished for a long time, but has an incredible potential.”