Now, Musk, who ultimately didn’t take Tesla private, is doing so via Twitter. As part of his $44 billion acquisition of the social media service, which closed Thursday, he is delisting the company’s stock and taking it from public shareholders.
Making Twitter a private company would give Musk some advantages. Unlike public companies, private companies do not have to publicly disclose their performance on a quarterly basis. They are also subject to less regulatory scrutiny and can be more tightly controlled by owners. That means Musk can make changes to Twitter — including tweaking the platform’s content rules, finances and priorities — without taking into account the concerns of the investing public.
Brian JM Quinn, a professor at Boston College Law School, said: “If you think you should run a public company, and you don’t accept other views from shareholders, etc., then run a public company. Public companies are hard.” “By taking it private, you feel like you have more flexibility.”
Here’s how Twitter will change as a private company under Mr. Musk.
How did Mr. Musk take Twitter private?
As part of his acquisition of Twitter, Musk is merging the social media company with X Holdings, a Delaware-based corporate entity he set up to handle the deal. X will acquire all of Twitter’s stock and will control the service, while Mr. Musk will control the holding company.
What will happen to Twitter’s stock?
Twitter will be delisted from the New York Stock Exchange and its shares will no longer be traded on the open market starting Nov. 8, according to a securities filing. In September, Twitter’s shareholders approved the sale of the company to Musk, agreeing to sell his stock to him for $54.20 per share. Investors will be able to claim the cash value of their shares.
What will happen to Twitter’s board?
With the closing of the deal, Twitter’s board of directors will dissolve and its nine members will no longer preside over the company’s operations. Musk is likely to appoint a new board of friends and investors who helped fund the acquisition. The new board will be responsible for planning Twitter’s trajectory as a private company.
Elon Musk buys Twitter
Blockbuster deal. In April, Elon Musk made an unsolicited $44 billion bid for the social media platform, saying he wanted to turn Twitter into a private company that would give people more freedom to express their opinions on the service. Here are the results of the months-long battle that followed:
“The law still requires a board of directors, which may include Elon Musk and some of the company’s other large equity investors,” said Eric Talley, a professor at Columbia Law School. “I hope Mr. Musk will put his To operate as a somewhat friendly dictatorship.”
What will happen to Twitter’s executives?
Mr. Musk has started cleaning the house, and several Twitter executives were fired on Thursday.
The fired executives included Twitter CEO Parag Agrawal, who had clashed publicly and privately with Musk. When Mr. Musk complained this year about Twitter’s problem with unchecked spam, Mr. Agrawal pushed back against his claims on Twitter. Mr Musk responded with a poop emoji.
At another point in time, Agrawal texted Musk, telling the billionaire that his criticisms were hurting Twitter, court documents show.
“It’s a waste of time,” Musk countered.
Other executives fired include Twitter CFO Ned Segal; Vijaya Gadde, top legal and policy executive; and general counsel Sean Edgett.
Under the merger agreement, Mr. Agrawal is likely to receive golden parachutes worth about $60 million, Mr. Siegel $46 million and Ms. Gard about $20 million. It is unclear whether Musk intends to pay.
What about Twitter employees?
Twitter has about 7,500 employees. Some of them have been uncomfortable with the sale of the company to Mr. Musk for months. Many may face layoffs or job changes as new bosses take over.
Their compensation will also change. Employees usually receive stock options in the company. However, under the merger agreement, with the delisting of Twitter stock, employees will be cashed out on the shares they already own and receive cash dividends in the future, not the stock options they planned to receive. Some employees worry that Musk may not abide by the agreement.
“Most of these employees have worked for a public company and are used to public option grants, which are fluid,” Mr Quinn said. “They’re going to have to come up with some other Silicon Valley-friendly way to keep people.”
What financial pressures will Twitter face as a private company?
By going private, Twitter will avoid some public scrutiny because it no longer needs to disclose the health of its business on a quarterly basis. This will give Musk some flexibility as he changes Twitter.
But he will face pressure from the banks, which have lent him $12.5 billion to start paying his debts. Financial analysts say the cost of repaying these loans could be as high as $1 billion a year.
“He has less public pressure, but he has a lot of private pressure from the bank to pay,” Mr. Quin said of Mr. Musk. “Like almost every other private equity take-private, he needs a manager who is very operationally focused, lean and able to pay the day-to-day bills.”
Mr. Musk also received about $7.1 billion from equity investors to push the deal. He may also face pressure from those investors who may want him to tweet again at some point so they can get their money back.
In some going-private transactions, the owner chooses to sell a branch of his company to pay down debt. Mr. Musk could choose to do the same on Twitter.
“It is conceivable that certain aspects of Twitter could be spun off, sold or spun off to raise funds to pay down debt,” Mr Tully said. “Twitter is kind of pared down to its core mission right now. They have to be a little creative.”