When billionaire Elon Musk officially petitioned the Securities and Trade Fee (SEC) on Friday to get out of his deal to purchase Twitter, I as soon as once more puzzled why the functions associated are likely to all this difficulties. What had been Musk’s motivations for purchasing Twitter in the first place? And why would Twitter want to make its staff members do the job for a guy who does not appear to treatment a lot about their company?
These are all very intelligent and (I think) rational people we’re talking about. But right now, their actions look cryptic, coded, and performative. Over the weekend, analysts and some people today specifically involved in the action attempted to make perception of Friday’s bombshell.
Casey Newton, on his Substack publication Platformer, begins with a rational rationale for Musk’s obvious desire to depart the deal: Musk presented $44 billion for Twitter and prepared to borrow against Tesla inventory to elevate the money. When tech shares crashed, Musk’s present quickly seemed very substantial, primary to some really serious buyer’s regret.
“And so he solved to get out of the deal. He would not spend a great deal of energy in coming up with a plausible pretext,” Newton wrote. “The identical rationale he gave for seeking to obtain Twitter—that, in his estimation, it was whole of bots and spam—could instantly be repurposed into his rationale for not seeking to invest in Twitter.”
Musk would go on to tell his lawyers to ask for from Twitter countless amounts of data similar to bots, such as some that Twitter could not offer for privacy factors. The company’s refusal to source that info, of course, became the basis for Musk’s “breach” of deal claim—his escape hatch from the offer.
But even this seems like some variety of bizarre theater. Musk, his lawyers, and any person included in the offer who read the merger conditions have to know that his bots claim won’t hold h2o. As law firm and Bloomberg columnist Matt Levine explained back again in June, “Musk thinks, or says he thinks, that this representation (that Twitter accounts are considerably less than 5% bots) is not genuine. But even if he’s appropriate, he just cannot get out of the deal, except if it is untrue and would have a ‘material adverse effect’ on Twitter’s enterprise.”
Now Musk and Twitter show up to be headed for the courtroom. Twitter’s chairman of the board Bret Taylor tweeted as significantly on Friday:
The Twitter Board is dedicated to closing the transaction on the rate and phrases agreed on with Mr. Musk and strategies to pursue authorized action to implement the merger arrangement. We are self-confident we will prevail in the Delaware Court docket of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
Now, this complete drama in definitely obtaining an result Twitter employees, who have to sit by and look at as their prospective manager-to-be mocks Twitter leadership and business insurance policies to his 100-million-as well as followers on Twitter. Musk also doesn’t show up to respect the several years of get the job done performed at Twitter to manage misinformation and only presented broad-stroke methods to that sophisticated challenge. Minor surprise, then, that lots of Twitter workforce are now scheduling to depart the company, per Newton.
But, on the other hand, inventory-possessing Twitter employees—including CEO Parag Agrawal—have a good deal to achieve monetarily if the deal, which gives a generous $54.20 for each share, goes by means of. Twitter’s inventory has taken a beating in the course of Musk’s weird dance with the enterprise.
There could be another, more substantial, explanation, and it relates instantly to Twitter’s prospective buyers for development. Here’s analyst Ben Thompson producing in his Stratechery e-newsletter Monday:
“Here is the issue: the single most important piece of Twitter proper now is its acquisition agreement with Musk, and [Bret] Taylor and the board definitely do have a fiduciary responsibility to Twitter’s shareholders to maintain Musk to it, even if . . . it is negative for the business.”
So can there be any true winners in this article (other than the attorneys)?
The factor is, Musk could be participating in for factors you simply cannot capture on a harmony sheet, or even understand by making use of widespread feeling. It’s doable that to Musk this entire ordeal is, at the very least in part, some variety of joke. Levine wrote in Bloomberg:
He looks to obtain this pleasurable, and why not? When he pretends that he’ll purchase a general public company, it produces a huge drama with him at the middle of it. He receives to boss men and women all around, mobilize legions of bankers and attorneys and financing resources and random hangers-on hoping to get the offer carried out and then when he will get bored, he can convey to all these individuals to go household. “Haha, acquired you,” he can say, and they can all have a great chortle, or he can in any case.
There is precedent below. Musk threatened/pretended to just take Tesla private in 2018, a stunt that price tag him a $20 million great, courtesy of the SEC. In some strategies, he’s performing the similar thing with Twitter and in the best situation circumstance, it appears to be, he’ll encounter paying out Twitter a $1 billion break up charge.
Since Friday’s pull-out Musk has been possessing his normal entertaining with the affair, on Twitter:
— Elon Musk (@elonmusk) July 11, 2022
It is intriguing, and a bit unhappy, to look at Musk’s obvious mind-set about Twitter with that of company cofounder Jack Dorsey (who supported the offer right after its announcement April 25). If Musk thinks generally in the drama of the offer, Dorsey is a real believer in Twitter itself.
“In basic principle, I really don’t consider any person ought to very own or operate Twitter,” Dorsey wrote in a tweet April 25. “It desires to be a public superior at a protocol level, not a company.” Dorsey discussed that Twitter also has to perform as a enterprise to endure, and he considered that Musk could set it on a study course of solid growth.
No issue how the Twitter deal turns out, we’ll probable often bear in mind this prolonged and unusual vacation: A time when a jubilant (and really abundant), trickster bought—or said he would buy—a extremely influential social media company, then discarded the deal to go on to his next trick. At the time the dust settles, it is probable the Musk mythos is even larger sized than in advance of. He may wind up on the lookout much more like our generation’s edition of Howard Hughes. And he’d likely like that.
