Elon Musk's Twitter privatisation: what to expect?
#ElonMuskBuyTwitter#TwitterTakeover | Rather than taking Tesla private, Elon Musk is taking Twitter private. He is purchasing the social networking site for $44 billion, and as part of that deal he is delisting the shares and removing it from public shareholders' hands. This provides him many benefits.
Elon Musk called Michael Dell for help in August 2018. Musk wanted to turn his electric car company, Tesla, into a private company. He asked Dell, who had done the same thing in 2013 with his own computer company, about the process and the best lawyers to use for the complicated deal.
"What I really wanted to know was if he liked being alone." Musk talked about the Tesla project in a deposition. "Did he regret going private?"
According to court documents, Dell told Musk that it would be "a very difficult process," but that he would be glad to have gone through with it.
Musk, who didn't end up going private with Tesla, is doing the same thing with Twitter. As part of his $44 billion purchase of the social media service, which closed on Thursday, he is taking the company's stock off the stock market and out of the hands of the public.
When Musk turns Twitter into a private company, he gets some benefits. Privately held companies don't have to tell the public about their performance every three months like publicly traded companies do. They are also less closely watched by the government and their owners can have more control over them. That means Musk can change Twitter in any way he wants, including changing the rules for what can be posted, how much it costs, and what it focuses on. He won't have to worry about what investors think.
Professor of Law at Boston College Brian J.M. Quinn once observed, "It's impossible to operate a public corporation if you think you should be running it and you're not open to other people's perspectives, like investors." "When you go it alone, you really get a sense of independence."
Here's how Twitter will change now that Musk is in charge.
How does Elon Musk make his Twitter account private?
Musk is buying Twitter, and as part of the deal, he is merging the social media company with X Holdings, a business he set up in Delaware to handle the deal. All of Twitter's stock is being bought by X, which will control the service. Musk will run the holding company.
How does Twitter's stock do?
A securities filing says that Twitter will be taken off the New York Stock Exchange on November 8, and its shares will no longer be traded on public markets. Investors in Twitter had a meeting in September, agreed to sell their stock to Musk for $54.20 per share. This meant that Musk could buy the company. Investors will be able to get the money that their shares are worth.
What happens to the people who run Twitter?
When the deal is done, Twitter's board of directors will no longer exist, and its nine members will no longer run the company. Musk will probably put together a new board of friends and investors who helped pay for the purchase. As a private company, it will be up to the new board to plan Twitter's future.
Professor at Columbia Law School Eric Talley remarked, "It will still be needed by law to have a board of directors." "Among those would be Elon Musk and the other major stock investors in the firm." In my opinion, Mr. Musk will lead the company as a type of friendly dictator.
What happens to the top people at Twitter?
Musk has already started to clean house. On Thursday, he fired several of Twitter's top executives.
Among the people who were fired was Twitter's CEO, Parag Agrawal, who has had both public and private fights with Musk. This year, when Musk said that Twitter had a spam problem that wasn't being fixed, Agrawal sent out a tweet to refute him. Musk replied with an emoji of a poop.
A court filing says that at another time, Agrawal sent Musk a text message telling the billionaire that his criticisms were bad for Twitter.
Musk replied, "It's a waste of time."
Twitter also let go of its CFO, Ned Segal, as well as its senior legal and policy executive, Vijaya Gadde, and its general counsel, Sean Edgett.
According to the merger agreement, Agrawal could have gotten a golden parachute worth about $60 million, Segal would have gotten $46 million, and Gadde would have gotten about $20 million. At first, it was unclear whether or not Musk would actually make the required payments.
As for Twitter's employees, what about them?
About 7,500 people work for Twitter. Some of them have been worried for months that Musk would buy the company. As the new owner takes over, many people could lose their jobs or have to change jobs.
Also, their pay is going to change. Most of the time, employees get stock options in the company. But now that Twitter's stock is no longer on the stock market, employees will get cash instead of the stock options they were supposed to get under the merger agreement. This is because Twitter's stock is no longer on the stock market. Some of Musk's employees have worried that he might not keep the deal
"Most of these workers have worked for a public company before and are used to grants of stock options, which can be sold," Quinn said. "They will have to come up with some other way to keep people around that Silicon Valley will like."
As a private company, Twitter will face what kinds of financial pressures?
By going private, Twitter will avoid some public scrutiny because it won't have to report on the health of its business every three months. This will give Musk more options as he makes changes to Twitter.
But the banks that gave him $12.5 billion for the deal will put pressure on him to start paying back his debt. Analysts say that it could cost as much as $1 billion a year to pay back these loans.
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"There is less public pressure on him to make the payments, but the banks are putting a lot of private pressure on him to do so," Quinn said. "Like almost every other private equity take-private, he will need a manager who is very focused on operations, being lean, and being able to pay the bills every day."
Musk also got about $7.1 billion from equity investors to get the deal done. He may also have to deal with pressure from those investors, who may want him to take Twitter public again at some point so they can get back what they put in.
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In some take-private deals, company owners have sold parts of their businesses to pay off their debts. Musk could do the same thing on Twitter if he wanted to.
"It's possible that some parts of Twitter could be separated, sold, or spun off to make money that could be used to pay off debt," Talley said. “Twitter kind of is pared down to its core mission right now. They would have to think of something."