Elon. Musk. Actually. Bought. Twitter.
Lesson summary
Hi there, I’m Jeff and this is Plain English, the best way to upgrade your English with current events and trending topics. This is lesson 520, so you can find the full lesson at PlainEnglish.com/520. JR is the mastermind behind that; he makes sure you get all your lesson content every Monday and Thursday.
“The bird is freed,” he tweeted shortly after firing the CEO and other top executives. Elon Musk is the sole owner of Twitter, having completed one of the biggest private takeovers of a public company. This is a company he said he didn’t want just weeks ago. Today’s lesson is about how that all happened. You may remember we discussed this also in Lesson 468 , so you might want to review that at PlainEnglish.com/468.
The expression we’ll discuss today is “stand to gain” or “stand to lose”. And we have a quote of the week. Let’s get going.
Musk completes his Twitter takeover
Twitter is a private company again. The social media network was founded in 2006 by Jack Dorsey and three other co-founders. In 2013, it went public, with its shares trading on the New York Stock Exchange. But even during the golden age of social media, it didn’t take off like rival Facebook. Twitter is popular among politicians, journalists, and celebrities. But its product stagnated, while other social networks innovated, and the company never found a winning formula to convert its popularity and influence into profits.
Elon Musk is one of Twitter’s most prolific users. He has over 100 million followers; only Justin Bieber and Barack Obama have more. But Musk has also been also a major critic of Twitter the company, even as he was one of its power users, and even as he clearly loved the product. And then he inserted himself into the company in a big way. And today—at least as of when I’m recording this lesson—Elon Musk is the owner of the company.
Here is how it happened. In April, Elon Musk disclosed that he, as an individual, had been buying up shares of Twitter, a public company. Little by little, he had accumulated almost ten percent of the company. As a big shareholder, he was offered a seat on Twitter’s Board of Directors. He accepted the offer. As a board member, he could help influence the direction of the company. Just days later, however, he changed his mind, saying he didn’t want to influence Twitter at all.
He then changed his mind yet again and decided to buy the whole rest of the company. He offered $54.20 per share, take it or leave it. Musk claimed that Twitter was broken, had a lot of spam bots, tons of problems, and that he, Elon Musk, could fix it and make it worth a lot more in the future.
Ordinarily, there would be a lot of financial modeling, advisors, consultants, bankers, spreadsheets, math, and hard-nosed negotiation involved in such an offer. In Musk’s case, he appeared to have settled on the price on a whim; three of the four digits in his offer price of $54.20 per share are a marijuana joke.
Musk waived due diligence, meaning he committed himself to the purchase without doing any kind of detailed analysis, without receiving any confidential information, without even, you know, talking to management. This was highly strange. He agreed to put up some of the money and (incredibly) convinced several large banks to lend him the rest . The total bill was $44 billion—a lot even for the world’s richest man.
Twitter, at the time, was worth a lot less than $44 billion; its existing shareholders stood to make a lot of money from the sale. Twitter’s management and the Board had some serious reservations about Elon Musk, but the number was too good to pass up. They signed the deal.
Then, shortly after Musk’s purchase agreement was signed, the stock market went down and Musk’s offer, instead of looking merely very high, now appeared extremely high. Like, foolishly, unreasonably high.
Musk then started looking for a way to cancel the deal. He said that, upon further analysis, he discovered that Twitter had way too many bots and for that reason he shouldn’t have to buy the company. Never mind that only months before, bots were a reason he wanted to buy it. Now, the bots were a reason he couldn’t buy it. This is the kind of brazen inconsistency only the very rich and powerful can get away with.
Twitter dug in its heels and took Musk to court, saying that Musk signed his agreement, waived any due diligence, and he had to close. If he was unhappy with the price, well, that was too bad. He signed his commitment. Musk, too, dug in his heels. He took every opportunity to criticize Twitter all summer long, trying to make the company look fraudulent, so he wouldn’t be stuck with it.
They went to court in Delaware: Twitter, saying Musk had to buy the company like he agreed to, and Musk, saying he didn’t have to buy it since Twitter is all a fraud. In pre-trial motions, the judge appeared to be much more sympathetic to Twitter’s case than to Musk’s. A five-day trial was set for October 17. All the facts in the case, plus the judge’s history, plus the judge’s pre-trial rulings, all pointed to Twitter winning and Musk losing.
Then, Musk blinked. On October 3, two weeks before the trial was to start, Musk said he wanted Twitter after all. Forget all the summertime complaints, all the bad-mouthing, the deal was back on. Twitter was better than ever and he, Musk, couldn’t wait to take control. What’s more , Musk said he would pay the full price, $44 billion, exactly like he offered. So, he said to the judge, let’s just go ahead and cancel the trial.
The judge wasn’t having it. The judge said fine—I’ll delay the October 17 trial. But, the judge said, Musk had only until October 28 at 5:00 p.m. eastern time to close on the deal. If there were any more tricks, any more games, any more gimmicks, any more excuses, then the trial would be scheduled.
The judge showed herself to be someone who does not fool around. Her deadline and her demands were real. They were the realest thing in this whole unreal story. Everyone understood that if Musk didn’t close by 5:01 on October 28, then she would be steaming mad and she would schedule that trial.
Musk set the wheels in motion. Still there was a chance (however small) that something would go wrong. The deal depended on Musk’s lenders actually lending him their part of the purchase price. There was some brief drama as people speculated whether the lenders would back out of their commitments. But their commitments were pretty tight.
In the end, Musk closed on the deal on Thursday, October 27. This part, at least, was uncharacteristically drama-free. He officially requested the funds from the banks. The banks sent their part of the money. He sent his part. Twitter stock stopped trading. He took control on Thursday afternoon, a leisurely 24 hours before the court-imposed deadline. He fired the top three executives in the first few hours—something that was entirely expected. Then, days later he tried to deny them their contractual severance agreements—something that was not expected, but perhaps should have been.
Rank-and-file Twitter employees didn’t appear happy. Musk had, after all, threatened to fire 75 percent of the company, though in the end he only actually fired about 50 percent of them. Regulators in the European Union clarified that Twitter would have to follow EU laws on content moderation.
Advertisers, too, were worried about what a Musk-led Twitter might look like. Musk has famously said that Twitter should be as open as possible, meaning that it should have less content moderation. But advertisers (and advertisers pay the bills)—they like content moderation; no brand wants their ads posted alongside inflammatory, controversial, racist, violent, or sexual content. Musk, speaking almost like a responsible executive, said that he wouldn’t let Twitter become “a free-for-all hellscape” (his words).
A contract is a contract is a…
I don’t know. By the time you hear this, this could all be invalid. Nothing in this story remains unchanged for a period of 14 days. I wrote this lesson on October 28. I checked it again before recording it on November 9. It’s coming out on November 14. For all I know, everything could change by then. There’s even more drama that happened after the closing—just like last time, I had to stop somewhere, so I’m stopping here.
However. I will say I am glad he had to buy the company, not because I’m glad he’s the owner of Twitter, I honestly don’t care about that. It’s just that in the world of M&A, if you sign a purchase agreement, you have to keep your word. He seemed to think he was above all the rules, and if he was bored with this Twitter thing after a few months, then he could just get out of it. And I just have to hand it to that Delaware judge, she was not having it. And it’s really important that contracts like this be honored. If Musk had gotten away with this, then every big contract in the future would be just a little bit less solid.
So if you’re a Twitter user, brace yourself for some changes. Something tells me this will not be the last time you hear from me on this topic.
Learn English the way it’s really spoken
