How Elon Musk won Twitter
Twitter's board had a choice: Continue to fight Elon Musk or take the path of least resistance. It picked the latter, declaring victory and going home.
The big picture: Twitter is a very tough business to manage, with critics at every turn. The board decided to make it someone else's problem.
- Twitter's board made a completely defensible decision. It took an all-cash offer at a decent premium, without a rival bid, at a time when consumer tech stocks are sagging.
- But there also were legitimate reasons to reject Musk.
Flashback: Twitter originally welcomed Musk into the fold, offering him a board seat when he disclosed a 9.2% ownership stake,
- But then Musk changed his mind and launched his takeover effort. Twitter turned cold, adopting a defensive measure known as a poison pill.
What changed: Musk's announcement last Thursday that he'd secured financing for his bid, via a combination of his own cash and debt from Morgan Stanley, seemed to be the factor that turned the tide back in his favor.
- Before that, Twitter's board could fall back on the argument that Musk's talk was bigger than his walk — like when he tried taking Tesla private in 2018.
- Board dissent also moved into the open, via tweets from Jack Dorsey — Twitter's co-founder, former CEO and longtime admirer of Musk.
We still don't know exactly what happened behind the scenes, but do know that Twitter's board capitulated.
- Musk never raised his price, and Twitter also was unable to secure a "go-shop" agreement, which would have allowed the company to solicit superior bids.
- It doesn't sound like the board got any operational concessions from Musk, such as maintaining employee levels or the ban on former President Trump.
- During an all-hands employee meeting after the deal was announced, CEO Parag Agrawal and board chair Brett Taylor basically replied to such questions with: Ask Elon.