Elon Musk’s Twitter takeover is canceled: Here’s how we got here

Though few took notice, it’s clear Musk had an early interest in building up his stake in Twitter.

Musk announces 9% stake in Twitter

Musk declines board seat offer

• That Musk may have failed to report his Twitter share purchases to the Securities and Exchange Commission (SEC) on time (within 10 days), and because of that, investors who sold their shares and were unaware of Musk’s purchase potentially missed out on gains they could have gotten when his purchase became public on April 4, as the share value increased quite a bit then.
• It’s also alleged that his delay to disclose his stock purchase resulted in Musk saving $143 million at that time while buying Twitter stock at a lower price.

Musk offers to buy Twitter for $43 billion

According to a letter included within the SEC filing for the bid to buy Twitter, if the offer is not accepted, Musk said: “I would need to reconsider my position as a shareholder.”

Twitter’s board of directors mounts ‘poison pill’ strategy against Musk’s takeover bid

According to Investopedia, there are different kinds of poison pill strategies, and the one we’ve just described (where you let all current shareholders buy discounted shares, except for the investor who’s trying to take over) is known as a “flip-in poison pill.” This strategy eventually results in the takeover becoming increasingly cost-prohibitive for the investor who wants to take over.

Twitter’s poison pill strategy is expected to kick in if Musk’s stake in Twitter increases to 15% or higher.

Twitter confirms its ‘poison pill’ strategy via a new SEC filing

As we mentioned earlier, the poison pill strategy Twitter is using involves allowing all current shareholders (except for Musk) to buy more shares at a discounted price. In this latest filing, that discounted price would be $210. The filing also confirms that the strategy will kick in if an “Acquiring Person” (like Musk) buys 15% or more of Twitter’s stock.

A new SEC filing confirms Musk has secured funding for his Twitter bid

But it is important to remember, as Musk reminds everyone in this filing, that though he has secured funding and is considering a tender offer, that doesn’t necessarily mean a takeover will happen. Just that it is possible. And the filing also makes it clear that it is just as likely that it may not happen either, that Musk still “reserves the right to withdraw the proposal or modify its terms at any time including with respect to the amount or form of consideration.”

Twitter begins talks with Musk and is expected to accept his $43 billion bid (for now)

However, Reuters’ sources on the matter also say that the deal could still “collapse at the last minute.” It’s also worth noting that the current version of the deal still allows Twitter to accept a bid from another buyer even after signing the deal with Musk. But in order to do so, Twitter will have to pay a “break-up fee” to Musk.

Twitter’s stock price appears to be responding positively to this latest development: As of this writing on April 25, it is over $50 per share and the price is trending upward.

April 25, 2022: Twitter has officially announced that the company has accepted Musk’s offer for $44 billion, making it one of the largest tech acquisitions in recent history. The acquisition takes the company private, and puts the future of the platform in Musk’s hands.

His first tweet since officially owning the company reads as follows:

In terms of Twitter’s alleged non-compliance, the letter discusses yet again Musk’s concerns about the accuracy of Twitter’s reported percentage estimate of fake/spam bot accounts on its platform. Specifically, Musk has requested access to Twitter’s account data so he can “conduct his own analysis.” According to the letter, Twitter had not given access to the data Musk requested and instead offered explanations of its “own testing methodologies.”

Musk felt that Twitter’s offer was not sufficient and was basically a refusal to comply with the terms of their merger agreement, which the letter says includes a requirement on Twitter’s part to “provide data and information that Mr. Musk requests in connection with the consummation of the transaction.”

The letter concludes with the assertion that with Twitter’s alleged non-compliance with terms of the merger agreement, that Musk reserves the right to not buy the bird app and to end the merger agreement.

Twitter reportedly plans to answer Musk’s threat with offer of access to its “firehose” data

This “firehose” data is a massive amount of data which, according to the Washington Post, includes “not only a real-time record of tweets but the devices they tweet from, as well as information about the accounts that tweet.”

Musk officially cancels his acquisition of Twitter

“… Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement).”

Furthermore, Musk still alleges that Twitter has not complied with its merger agreement obligations to provide the “data and information” he has requested.