A month in the past, Musk’s major connection to the social media platform was as a prolific consumer. From there he outed himself as Twitter’s largest shareholder, earlier than turning into a short-lived potential board member, a hostile suitor and eventually a profitable dealmaker — tweeting dozens of occasions alongside the way in which.
The transaction got here collectively at breakneck velocity partially as a result of Musk waived the possibility to take a look at Twitter’s funds past what was publicly obtainable, but in addition as a result of that’s how the billionaire works. The 50-year-old Tesla Inc. head was deeply concerned within the particulars of the transaction, based on folks conversant in the method. And since he was a person investor unencumbered by a board or shareholders — in contrast to a company bidder — Musk was in a position to make most of the huge selections on his personal.
This account of the Twitter takeover is predicated on interviews with greater than half a dozen folks immediately concerned with the transaction. Lots of them echoed the identical sentiment — that they’d by no means seen a deal this huge put collectively as rapidly as this one of their total careers. A consultant for Twitter declined to touch upon the small print, whereas representatives for Musk didn’t instantly reply to requests for remark.
Unwelcome suitor
From the second he disclosed his roughly 9% stake in Twitter on April 4, Musk was seen as a possible adversary to Twitter’s board, staff and lots of of its customers.
That set the stage for an uphill battle when he made his $54.20-a-share bid public on April 14. Twitter instantly went into defensive mode and adopted a poison capsule the next day. Musk’s tweets hinting at a young provide additionally appeared to be designed to threaten the San Francisco-based firm.
However the unlikely courtship had just a few key turning factors, permitting the world’s richest individual to ingratiate himself with Twitter’s board, together with Chairman Bret Taylor.
The primary breakthrough was arising with $46.5 billion for the bid. After bringing on Morgan Stanley as his adviser, Musk was in a position to get a dozen banks to commit $25.5 billion in debt financing. He pledged one other $21 billion in fairness financing himself.
Doing video calls, making shows and sharing elements of his imaginative and prescient for the way forward for Twitter helped the banks get snug working with him, Bloomberg reported.
There have been additionally no less than two consecutive weekends the place advisers labored by way of just a few sleepless nights. The code identify for the bid was “Undertaking X” at a number of the banks concerned. Musk, in the meantime, dialed in to calls from locations like Texas, the place Tesla is now based mostly.
Investor plea
The second tactic Musk employed was interesting on to Twitter shareholders late final week. After revealing he had financing in place, Musk introduced his pitch to a few of Twitter’s largest lively traders and urged them to strain Twitter to have interaction, a number of the folks mentioned. Some shareholders reached out to Twitter to say they wished it to take the provide severely, they mentioned.
Twitter’s board, in the meantime — joined in some circumstances by administration — arrange conferences with eight to 10 of its traders to gauge shareholder views on a possible deal, one of many folks mentioned. These conferences started earlier than Musk made his financing commitments public.
The third catalyst that led to a deal was the position of the value, $54.20, and the way it in contrast with Twitter’s personal progress prospects. The corporate’s advisers, which included Goldman Sachs Group Inc. and JPMorgan Chase & Co., did a valuation evaluation and offered it to the board final Friday, one of many folks mentioned. Musk’s camp didn’t get a take a look at these supplies, although, given the choice to bypass reviewing Twitter’s books.
Twitter’s shares had been buying and selling properly under Musk’s bid, with the inventory closing at $47.08 the day before today, and much from their $70-plus highs of a 12 months earlier. However the query was whether or not the inventory might recuperate with out taking the deal. The evaluation didn’t paint an optimistic image.
Twitter’s board concluded from the presentation that, based mostly on the place friends had been buying and selling, its shares wouldn’t attain Musk’s bid worth anytime quickly.
Talks warmth up
As soon as that evaluation was accomplished, Taylor went to Musk. The chairman, whose day job is co-CEO of Salesforce Inc., stepped up discussions and the 2 sides labored towards a top level view of the deal.
When Musk first revealed the bid, he described it as his “finest and closing” worth, and that held true. Throughout the talks, Twitter’s advisers didn’t reach getting a better worth or a so-called go-shop interval — the place the corporate might solicit different provides. However they did safe a higher-than-average reverse breakup payment, giving Twitter’s board the boldness that Musk wouldn’t scrap the settlement on a whim.
Musk famously floated the concept of taking Tesla non-public in 2018, saying that funding was secured, solely to shelve the plan just a few weeks later. The episode drew lawsuits from traders and the U.S. Securities and Change Fee and has loomed over Musk’s status.
However as negotiations with Twitter progressed, Musk was a sponge who soaked up banker lingo after which used it himself, the folks concerned within the deal mentioned. He would typically e mail bankers on to get their opinions on some components of negotiations, corresponding to termination charges, and weighed the professionals and cons thoughtfully. One individual mentioned that whereas Musk has a public persona of taking pictures from the hip, in non-public he was curious, considerate and open to suggestions.
Supply: Live Mint