Elon Musk called Michael Dell for counsel in August 2018. Musk, who was attempting to take Tesla, his electric vehicle firm, private, questioned Dell about the process and the best lawyers to utilise for the tricky transaction.
Musk, who did not take Tesla private, is now doing so with Twitter. He is delisting the company’s stock and removing it from the hands of public shareholders as part of his $44 billion acquisition of the social media site, which concluded on Thursday.
Making Twitter a private corporation provides Musk with certain benefits. Privately held corporations, unlike publicly traded companies, are not required to make quarterly public reports about their performance. They are also less regulated and can be more strictly controlled by an owner. That means Musk may take over Twitter, including changing the platform’s content guidelines, economics, and objectives, without having to worry about investors’ concerns.
Musk is merging Twitter with X Holdings, a business vehicle he established in Delaware to execute the transaction, as part of his acquisition of Twitter. X will control the service after purchasing all of Twitter’s stock, while Musk will control the holding company.
According to a securities filing, Twitter will be delisted from the New York Stock Exchange and its shares will no longer trade on public markets as of Nov. 8. Twitter’s shareholders authorised the company’s sale to Musk in September, agreeing to sell their stock to him for $54.20 per share. Investors will be entitled to claim their shares’ cash worth.
Following the completion of the transaction, Twitter’s board of directors will be dissolved, and its nine members will no longer preside over the company’s operations. Musk will almost certainly form a new board of directors comprised of friends and investors who contributed to the acquisition’s funding. The new board will be in charge of charting Twitter’s course as a private firm.
Musk has already begun cleaning house, with several top Twitter executives sacked on Thursday.
Among those let go is Twitter CEO Parag Agrawal, who has argued publicly and personally with Musk. When Musk warned earlier this year that Twitter had an unregulated spam problem, Agrawal responded via Twitter. Musk’s response was a faeces emoji.
According to a court document, Agrawal texted Musk, alerting the billionaire that his complaints were affecting Twitter.
Twitter will sidestep some public scrutiny by going private because it will no longer be obligated to make quarterly disclosures regarding the health of its business. This gives Musk considerable leeway as he adjusts Twitter.
However, the banks that gave him $12.5 billion for the acquisition will put pressure on him to start repaying his debt. According to financial commentators, the cost of repaying those loans might be as much as $1 billion every year.
Musk also received approximately $7.1 billion from equity investors to complete the transaction. He may also face pressure from those investors, who may expect him to re-list Twitter at some time in order to return their investment.
In certain take-private transactions, owners have chosen to sell branches of their businesses in order to settle their debts. Musk may decide to do the same at Twitter.