Elon buys Twitter: What this could mean for the Platform

By Kaushik KB, Online Content Writer, siliconindia | Thursday, 28 April 2022, 00:47 Hrs

Elon Musk acquired Twitter for $44 billion on Monday, assuring a more compassionate touch to policing content on the platform where he can endorse his interests, critics and orates on social and economic issues to more than 83 million followers on Twitter.

The firm, which went public in 2013, is set to turn private once the deal ends later this year, subject to Twitter shareholders and regulatory approvals. The deal caps raged two weeks at the social media company after it disclosed that Musk had approximately a 9.1% stake in the firm since January 2022.

It wasn't surprising, Musk's $44 billion deal to buy social network Twitter. Since the Tesla chief was very serious about acquiring Twitter. The financing from Morgan Stanley is shored up. The agreement contains a fee of $1 billion that he – or Twitter – would have to pay if they renege on the contract. And Twitter's lawyers even wedged in a so-called "specific performance" clause, which could theoretically force Musk to purchase the company if he threatened to back out. However, this could probably be settled by adding to the break fee in practice.

Why Elon Musk wanted Twitter?

Elon Musk is a prolific user with more than 83 million followers on the micro-blogging site (Twitter). Musk expressed on buying Twitter as “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”.

The world’s richest man talking about free speech and humanity’s prospect after buying one of the most influential social media platforms seems to be the most politically correct thing to do. But it is certainly ironic seeing that the billionaire buyer had no doubts over the years about using the social media platform to aggressively uphold his business interests as well as block and, some may say even bully, critics.

Musk always stressed what has been a sensitive issue for Twitter in recent years, its inability to convincingly come across as a platform where healthy conversations can occur.

Who sold Twitter?

Twitter's board at first passed an anti-takeover measure known as a poison pill that could have caused a takeover attempt to be prohibitively expensive. But when Musk summarised the financial commitments he'd lined up to back his offer of $46.5 billion and no other bidders appeared, the board opened negotiations with him.

Bret Taylor, head of Twitter's board of directors, reassured employees that the deal with Musk prioritized "operating continuity" until the agreement was completed. Taylor also added, "I think we feel very relaxed that the deal gives this team the capability to continue to make the company successful in between signing and closing the transaction".

Twitter's board weighed a circumstance that many shareholders could back him in a tender offer unless it sought to negotiate a deal with Musk. While the poison pill would have stopped Twitter shareholders from tendering their shares, the company was worried that its negotiating hand would have significantly weakened if it was shown to be going against the will of many of its investors.

Under pressure, Twitter began bargaining with Musk to purchase the company at the proposed $54.20 per share price. The deal eventually culminated in Twitter's run as a public company since its 2013 initial public offering.

What about Parag Agrawal's CEO Run?

While Musk will own Twitter outright and will be able to make executive judgments on new features and how they should be run, it's unlikely that he will recreate an active role in the day-to-day administration of the site.

Parag Agrawal presently leads Twitter and has praised the deal, saying he was "deeply proud of" Twitter's achievements. Agrawal, an Indian-American software engineer, worked as a research intern at Microsoft Research and Yahoo! Research before entering Twitter in 2011.

Agrawal took over from Dorsey as CEO in November 2021, when Dorsey declared his resignation, to be replaced by Agrawal effective instantly. Unlike his predecessor, Agrawal receives $1 million (£790,000) in annual salary as CEO and $12.5 million (£9.9 million) in stock compensation. But Musk said in his offer document to Twitter's board of directors that he didn't have "confidence" in the current management.

On 25th April, Agrawal informed his employees that the company's future was unsure, though he guaranteed employees that there would be no layoffs. "Once the deal closes, we don't know which direction the platform will go".

According to Twitter's newest proxy filing, Agrawal and Chief Financial Officer Ned Segal all have "Change in Control" clauses. The clause notably says Agrawal's reporting to the "board of directors of a publicly-traded entity," meaning any plan to take Twitter private would trigger it. Agrawal would receive a $38.7 million (£30.5 million) pay package if Musk removed their employment, while Segal would receive a $25.5 million (£20. million) deal.

Swiggy, Zomato posted hilarious tweets on Musk’s acquisition

Swiggy shared a screenshot of what seemed like Musk’s order on the app and wrote, “We saw what Elon bought next.” This order by Musk comprised Twitter, Motichoor Laddu and Kaju Katli, which cost $44 billion, Rs 3,200 and Rs 4,400, respectively.

Zomato also said that Musk chooses what company to buy next in less time than people decide what pizza to order next. Zomato stated, “Elon Musk takes lesser time in buying companies than I do in deciding what pizza to order.”