1. Elon Musk Buys Twitter
- Elon Musk has finally completed his US$44 billion acquisition of Twitter, putting the world’s richest man in charge of the struggling social network after six months of public and legal wrangling.
- Musk has long been deft at managing corporations, keeping companies like SpaceX private, and only listing electric vehicle maker Tesla purely out of necessity.
Capping off a corporate drama that wouldn’t look out of place in a soap opera, Elon Musk has finally completed his US$44 billion acquisition of Twitter, putting the world’s richest man in charge of the struggling social network after six months of public and legal wrangling.
Among Musk’s first moves after taking over has been a purge of leadership, with Twitter’s CEO Parag Agrawal, and CFO Ned Segal among the early departures.
Musk has also fired Vijaya Gadde, Twitter’s head of legal, policy and safety, as well as general counsel Sean Edgett, paving the way for the eccentric billionaire to create his own imprimatur at the social networking company.
Twitter shares will be suspended from trading on the New York Stock Exchange on Friday, according to the exchange’s website and shareholders will be paid US$54.20 per share, with Twitter set to operate as a private company.
Musk has long been deft at managing corporations, keeping companies like SpaceX private, and only listing electric vehicle maker Tesla purely out of necessity.
In numerous in-house communication to staff, Musk has often explained the need to keep SpaceX private and why Tesla’s IPO was also a necessity, which has frustrated some employees, especially those looking to cash out their shares, but found support in others.
With Twitter set to go private, Musk has the opportunity to take the company that popularized text-based updates in the early days of social media and recast it according to his own vision of what social media should look like.
Musk’s ownership will bring immediate disruption to Twitter’s operations and the billionaire has promised to cut jobs and costs at Twitter, while boosting product innovation in an attempt to build a “super app” that incorporates payments, commerce and messaging.
There has already been speculation that Twitter will incorporate cryptocurrency payments into its new app.
Musk has said he wants to ensure “free speech” on the social network, which is likely to mean looser content moderation standards, and plans to restore some high-profile accounts that were kicked off Twitter for breaking rules, including former U.S. President Donald Trump’s.
The deal, once coveted by bankers, could turn into a nightmare with some of the biggest names in the leveraged finance industry facing steep losses as interest rates have soared from the time the deal was first broached to the current acquisition.
A group of banks led by Morgan Stanley, including Bank of America and Barclays, committed US$13 billion in financing for the deal in April when debt markets were still relatively stable and interest rates were rising, but had not been hiked at the current clip.
However, market volatility has left banks with few options other than to fund it themselves and keep it on their balance sheets, nursing those losses until credit conditions eventually become more favorable.
Committing to coming up with US$33 billion of equity in total, Musk has said he has raised at least US$7 billion for his bid from a roster of investors including Oracle co-founder Larry Ellison, cryptocurrency exchange Binance, and asset management groups Fidelity, Brookfield and Sequoia Capital.