- In early April, Elon Musk became Twitter’s largest shareholder.
- Three weeks later, Twitter accepted Musk’s $44 billion takeover over.
- Now he wants out of the deal, and Twitter is suing Musk to hold him to his word.
When the news broke in April that one of Twitter’s power users, Elon Musk, had become the company’s largest single shareholder with a 9.2% stake, expectations for his increased involvement in shaping the platform shot up like a SpaceX Falcon rocket.
Within a chaotic month of reactions and predictions, new features, policies, and strategies were speculated upon, a board seat was declined, and a $44 billion offer was accepted.
Developments since April have been slower, but no less volatile, as share prices for both Twitter and Tesla took beatings and Musk searched for a way to renegotiate the deal, ultimately telling the company on Friday he was terminating the deal.
Here’s how it went down.
A bit of backstory
The saga begins in January when records show Musk began purchasing shares of Twitter on an almost daily basis.
By March 14, he reached a 5% stake, representing a threshold that the US Securities Exchange Commission deems large enough to require public disclosure.
But instead of revealing his stake by March 25 as required, Musk said nothing and continued quietly amassing shares at what experts told the Washington Post were artificially low prices.
The following week, Musk implied that Twitter was undermining democracy by “failing to adhere to free speech principles.”
“Is a new platform needed?” he asked on March 26.
Later that day, he said, “Am giving serious thought to this.” He would go on to buy millions more shares of Twitter stock.
Monday, April 4
Musk revealed his ownership of 73,486,938 shares, worth 9.2% of Twitter, in a Monday 13-G filing with the SEC. The market and social media reactions were immediate.
The stock price surged more than 25% on the news as investors began pricing for a potential sale of the company.
“Some investors are certainly hoping for a sale, but we believe the stock move is likely an overreaction for this broadly speculative possibility,” Bernstein analysts led by Mark Shmulik said in a note.
That evening, Musk tweeted a poll asking his followers if they “want an edit button.”
Tuesday, April 5
The next day, Twitter notified the SEC of its intent to appoint Musk to its board of directors “as promptly as practicable,” so long as he not own more than 14.9% of the company’s shares.
The stock shot up another 10% following the announcement, and Musk tweeted that he was looking forward making “significant improvements” to the service.
Twitter’s founder, Jack Dorsey, said he was “really happy” about the idea of Musk joining Twitter’s board.
A 13D (distinct from 13G) financial filing on Tuesday revealed that Musk had been on a Twitter buying spree nearly every day since early January.
Wednesday, April 6
On Wednesday, the Washington Post estimated, based on calculations, that Musk netted savings of $156 million by skipping the deadline to disclose his 5% stake back in March. By keeping his ownership quiet, Musk was able to buy shares at a 30% discount, finance experts said.
Thursday, April 7
Employee reactions continued to gather steam, with with one staffer calling Musk “a racist,” and others expressing concerns over potential interference in the company’s content moderation.
Saturday, April 9
On the day he was set to begin serving as a board member, Musk spent a fair amount time rattling off a list of changes he would like to see on the platform, including dogecoin payments, price cuts, and authentication checkmarks for its Blue subscription service.
Sunday, April 10
On Sunday, he tweeted — then deleted — a suggestion that Twitter’s San Francisco headquarters be converted to a homeless shelter and a poll asking whether the company should “delete the w in twitter.”
Late on Sunday evening, Agrawal tweeted a note saying that “Elon has decided not to join our board,” and explained that Musk had shared his decision the day before.
“I believe this is for the best,” Agrawal added. “Elon is our biggest shareholder and we will remain open to his input.”
Monday, April 11
Unconstrained by an agreement that he own less than 14.9% of the company, Wedbush analyst Dan Ives told Insider’s Isobel Asher Hamilton, that “this now goes from a Cinderella story … to likely a ‘Game of Thrones’ battle between Musk and Twitter.”
Thursday, April 14
Musk offers to buy Twitter for $54.20 per share in a deal valuing the company at $44 billion.
“Twitter needs to be transformed as a private company,” he said in a letter to chairman Bret Taylor. “Twitter has extraordinary potential. I will unlock it.”
Twitter confirmed it recieved Musk’s offer and said the board would review it, while Musk threatened to “reconsider” his 9.2% stake in the company if the board rebuffed him.
Monday, April 25
Twitter’s board accepts Musk’s offer, valuing the company at a 38% premium over its closing stock price on April 1, 2022, before his initial stake was disclosed.
Under the deal, a shell company formed by Musk would acquire Twitter entirely, making it a privately held firm roughly nine years after its initial public offering.
Friday, May 13
Musk tweets that the Twitter deal is “on hold” while he investigates the company’s statement that less than 5% of its accounts are spam or bots.
Shares in Tesla, which Musk is using as collateral to finance the deal, had fallen by roughly 25% since the agreement was announced.
Monday, May 16
Twitter shares returned to the $38.31 price they had before Musk announced his stake — far below the $54.20 offered in the deal — as investors appeared to have their doubts about whether it would go through.
Thursday, May 28
The US Securities Exchange Commission weighed in, asking Musk to explain why he was late in disclosing when he reached a 5% stake in Twitter, as is required by law.
Monday, June 6
Lawyers for Musk filed a complaint with the SEC arguing that Twitter was “actively resisting and thwarting [Musk’s] information rights,” and threatening to jettison the deal.
Ordinarily a prospective buyer would conduct this due diligence ahead of signing an agreement, but Musk elected to skip that process.
Wednesday, June 8
Days later, the Washington Post reported that Twitter would give Musk’s team full access to the “firehose” stream of more than half a billion daily tweets.
A source told Insider’s Kali Hays that Musk would “mine it to make wild accusations” about bots or automated accounts on Twitter’s platform.
Thursday, June 16
Musk virtually joins an all-hands meeting with Twitter for the first time to answer questions from employees.
Tuesday, June 21
Twitter’s board unanimously approved the merger agreement, moving the deal one step closer to its conclusion.
Thursday, July 7
The Washington Post reported that sources “close to Musk” described the deal as in “serious jeopardy,” claiming that Musk’s team has not been able to verify Twitter’s spam and bot estimates.
Meanwhile, a third of Twitter’s recruiting team was laid off amid a hiring freeze that was implemented in May.
Friday, July 8
Lawyers for Musk notify the SEC that he plans to terminate the merger, citing “material breach of multiple provisions” of the agreement.
Twitter’s board quickly shot back saying they intend to pursue legal action to enforce the deal: “We are confident we will prevail in the Delaware Court of Chancery.”
Sunday, July 10
Twitter taps one of the world’s top corporate law firms that specializes in merger litigation, Wachtell, Lipton, Rosen & Katz, to make good on its pledge to close the deal.
Tuesday, July 12
Lawyers for Twitter drop a 62-page lawsuit after the bell accusing Musk of “refusing to honor his obligations,” and that he is backing out “because it no longer serves his personal interests.”
The suit was chock full of fiery lines, including calling Musk’s exit strategy “a model of hypocrisy.”
It also claims Musk admitted to have not read a detailed report provided by Twitter about its bot calculation methodology — the very issue Musk says is his reason for backing out.
The story isn’t over yet
It’s unclear exactly how all of this will play out in the coming days, but legal experts tell Insider that Musk is inching closer to a legal nightmare and a billion-dollar fee if the deal doesn’t go through.