It’s official … again. Elon Musk, the richest man in the world, is the new owner of Twitter Inc. His first order of business was firing CEO Parag Agrawal, CFO Ned Segal, and other top executives.
A Securities and Exchange Commission filing Friday confirmed the deal closed Thursday, and that Twitter is now part of Mr. Musk’s X Holdings I Inc.
After closing the deal, Musk simply tweeted “The bird is freed,” on what is now his platform.
The Long and Winding Road
His takeover of the company was not a smooth one. The deal sat in limbo for over five months and gave way to adversarial litigation toward the end.
Musk began buying shares in the social media giant last year. The first whisperings of what would become the biggest social media shake-up of the year came on April 4 when Musk used a (relatively) small portion of his enormous wealth to secure a 9.2% stake in Twitter. The stock purchase, worth $2.9 billion, saw Musk become the social media company’s biggest outside shareholder.
He initially presented himself as a passive shareholder, but soon took began tweeting cryptic messages and asking users via polls how they viewed the platform and what changes could potentially be made.
After news of Musk’s purchase broke in late April through an SEC filing, shares of Twitter rose 26% in pre-market trading, adding $8 billion to its $31.5 billion market value.
Shortly after, negotiations broke down. Musk claimed the number of non-user “bots” on the site was higher than the five percent reported by Twitter’s board. According to Musk’s lawyers, over-reported numbers of real traffic to the site opened the door for a renegotiation of the $44 billion price tag initially agreed upon.
Litigation inevitably followed.
Water Under the Bridge
Twitter CEO Parag Agrawal was deposed on Sept. 26. Lawyers for Musk questioned Agrawal as a high-profile trial was being set for mid-October.
Musk wanted to back out of the deal following the “bot revelation,” and alleged there are glaring security vulnerabilities on the platform that significantly de-value the social media site.
An analysis of bot activity by Cybara did eventually find spam and bot accounts make up an estimated 11% of Twitter’s total user base. The number is significantly higher than the board of Twitter estimated, confirming Musk’s initial suspicions.
However, the deal was back on the table by mid-October, as Musk attorney Alex Spiro announced that Musk ultimately decided to do the deal at the original $54.20 a share price and on the original terms.
Musk may have held some ill will toward Agrapawal and the other Twitter execs, as shown by his immediate dismissal of them, or it could have simply been a decision for the good of the company moving forward. Either way, it was a decision he had the power to make.
What Happens Now?
The road ahead for the platform Musk describes as the “de facto town square” is unclear, as a new crew at the helm could decide to take the ship in a number of different headings.
What we do know is that Musk is a self-proclaimed “free speech absolutist,” and has criticized censorship on Twitter for years.
His libertarian-leaning views on speech could open the door for previously banned controversial figures such as Milo Yiannopoulos and even former President of the United States Donald Trump.
While neutrals sit back and watch the new regime unfold in whatever way it sees fit, stakeholders will be sitting uncomfortably on the edge of their seats watching the markets with hawkish intensity.