Elon Musk’s unconventional bid to take Twitter private

The South Africa-born entrepreneur caught the ailing social media company by surprise with his offer

Today's expression: Come up with
Explore more: Lesson #468
May 16, 2022:

Elon Musk, the billionaire founder of Tesla, SpaceX, and other companies, surprised the business world by offering to buy Twitter, a publicly-traded company, for about $44 billion. Not everyone took him seriously at first, but he backed up his offer with the money he needs to do the deal. Plus, learn the English expression "come up with."

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Elon Musk’s bizarre Twitter takeover

Lesson summary

Hi there, I’m Jeff and this is Plain English, where JR and I help you upgrade your English with current events and trending topics. This is lesson 468, and that means you can find the full lesson content at PlainEnglish.com/468.

Elon Musk is the world’s richest man, according to Forbes magazine, which ranks the wealthiest people in the world. He runs several other companies, has a massive social media presence, a lot of cultural influence, and now he has agreed to buy Twitter. In today’s lesson, I’ll tell you how this all came together.

In the second half of today’s lesson, I’ll show you what it means to “come up with” something. We also have a quote of the week. Let’s get started.

Timeline of a Twitter takeover

The South Africa-born Elon Musk has been a technology entrepreneur for decades. He sold a software company for hundreds of millions of dollars in 1999. He was also one of the co-founders of PayPal, an online payments platform. When eBay bought PayPal in 2002, Musk got another big payout.

He then went on to create three big companies, all of which he still controls. They are SpaceX, a private space flight company; Tesla, an electric carmaker; and the Boring Company, which digs deep tunnels underground for trains and utilities. He also has a number of side projects.

Twitter, we all know, is a social media platform that started in 2006. For a hot minute, it seemed like it might overtake Facebook, the dominant social media platform at the time. But it never got there. Although Twitter today has a lot of cultural influence, it isn’t a big business by technology standards. As a company, it’s only about seven percent as valuable as Facebook. It hasn’t been able to find a way to grow its user base or monetize its traffic the way other platforms have done. TikTok, Snap, and Facebook all have more users.

Twitter is a public company; its shares are traded on the New York Stock Exchange. On April 4, Elon Musk disclosed that he had accumulated about nine percent of Twitter’s stock by quietly buying up shares on the public market. This disclosure was required by law: when big investors accumulate lots of shares of public companies, they’re required to disclose their ownership to the public.

At the same time they do that, investors are required to say whether they’re passive investors, just buying the stock to hold onto, or whether they want to influence the way the company is run in the future. Musk said he was a passive investor; he only wanted to hold onto the shares.

That may not have been a lie, but it was definitely not true. Nine days later, Musk agreed to serve on Twitter’s Board of Directors, where he would have a significant say in how the company is run.

Less than a week later, Musk decided he didn’t want to be on the Board of Directors after all . Twitter’s CEO breathed a sigh of relief, saying it was “for the better” that Musk wouldn’t be involved on the Board. But just four days after that, Musk shocked the market: he said he wanted to take Twitter private. That means he—one person—wanted to buy the whole company. The total bill would be $43 billion; that’s a lot even for the world’s richest person. In fact , it would be one of the biggest private takeovers in history.

At first, it appeared that Musk wouldn’t have enough cash to actually buy Twitter, since most of his wealth is in Tesla stock. Yes, he could—and did—get some money by selling a little Tesla stock. But he can only do so much of that: it wouldn’t be a good idea to sell too much, since Tesla is what is really making Musk rich right now. Soon after he made the offer, then, it wasn’t clear that he could really get enough money to back up his offer.

And there’s also something else. Musk is a bit eccentric; he often doesn’t follow the traditional rules of business. And a lot of businesspeople don’t always know whether Elon Musk is being serious or whether he’s trolling them. Twitter’s Board of Directors didn’t know what to think, so they tried some delaying tactics.

But then Musk surprised Twitter and came up with the money. He backed up his offer with a detailed plan for how to pay for the company. Some of the money would be his personal cash and some of it would be from bank loans. He had commitment letters from Morgan Stanley, Bank of America, and six other banks—these are major global lenders that don’t joke around. The offer, it appeared, was real.

Now, the ball was in Twitter’s court. Twitter’s Board of Directors represents all the shareholders and the Board had to decide whether to accept the offer or not. Before all the rumors started, the stock was trading at about $39 per share, well below Musk’s offer of over $54 per share. At first glance, it appeared to be a good deal: all the non-Musk shareholders would get an instant profit of 38 percent. Twitter’s Board had a duty to consider an important question: would the company be better off selling to Musk now, or should it try to raise its value with the current management and strategy?

They went with Musk. After a marathon Easter and Passover weekend of negotiations, Twitter and Musk struck a deal—it was Musk’s number.

So that means right now, Elon Musk is under contract to buy Twitter—he hasn’t actually done so yet. These things take time, so the deal is expected to close in the fall. In the meantime, Twitter’s Board of Directors and management are operating as normal…or, as normally as possible with the very awkward knowledge that the social media platform is about to change really soon.

No other takers?

Didn’t anyone else want Twitter? Twitter’s Board of Directors was required to consider Elon Musk’s offer, but the offer was very public. Another company could have offered the same, or more. But who would that be? Other social media companies are under heavy criticism for being monopolies; some governments want to break them up. So the other social media companies couldn’t very well buy a big competitor and get even bigger.

I thought maybe Microsoft might want to work it into LinkedIn or maybe Salesforce could find some use for it, but in the end there were no other offers. The fact is Twitter is full of controversy and no stable business wanted to take on all that controversy.

In a future lesson, we’ll talk about Elon Musk’s vision for Twitter and how that might—might—change social media for the better. But for now, we have an expression to talk about.

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Expression: Come up with