Dorsey departure another win for Elliott Management
Sing it with me one more time: Elliott Management gets what Elliott Management wants.
Driving the news: Jack Dorsey yesterday stepped down as CEO of Twitter, nearly two years after the activist investor began pushing for his ouster. His replacement will be longtime CTO Parag Agrawal.
- Dorsey didn't mention Elliott in his resignation memo, instead going with some stuff about how it's important for companies to break free of their founders (you'll never guess who founded Square, where Dorsey remains CEO).
- Reminder: Dorsey didn't have voting control at Twitter. He does have it at Square, plus a ton more equity value and fewer political headaches.
What happened: Dorsey seemed to save his skin last March when Twitter agreed to give Elliott a board seat and accept a large new investment/share repurchase agreement with private equity firm Silver Lake (which also joined the board).
- Behind the scenes, however, Twitter's reconstructed board is said to have quickly formed a management structure committee.
- Twitter disclosed last November in an 8-K filing that it had "updated the CEO succession plan in line with best practices."
- That line was intentionally vague, but it basically meant that Twitter had launched a yearlong process to replace Dorsey, the culmination of which was made public yesterday.
Elliott stepped off the board earlier this year, but it continued to be involved — having signed a confidential information-sharing agreement with Twitter.
- The upshot is that Elliott had wanted two things: New management and an increased pace of product innovation.
- On the former, Dorsey is gone and there also have been changes at the chairman level. On the latter, Twitter has rolled out a series of products, including a subscription service called Blue and a Clubhouse knockoff called Spaces.
The bottom line: Elliott's asks often appear fanciful at first blush, whether the target is AT&T or Dell or eBay or Athenahealth or @jack. But, more often than not, its dreams become reality.