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Elon Musk closes the purchase of Twitter and fires the main managers | Economy

Tesla founder Elon Musk at an event in Texas.
Tesla founder Elon Musk at an event in Texas.AFP

Elon Musk has closed the purchase of Twitter this Thursday afternoon in San Francisco. His first decision has been to fire the CEO, Parag Agrawal, the CFO, Ned Segal, and the Legal Officer, Vijaya Gadde, who have left the company’s headquarters never to return. They are shielded with multimillion-dollar compensation, but Elon Musk is already the head of Twitter, as he had advanced in his social network profile. The New York Stock Exchange has announced the suspension of the listing pending the official announcement.

Weeks after the 51-year-old billionaire proposed to return to the original price of $54.20 per share and go ahead with the purchase, the last legal and financial fringes have been resolved, Twitter has agreed to withdraw the lawsuit and proceed to close the operation. . There is no turning back. The Musk era begins in the social network.

The tycoon born in Pretoria (South Africa) plans to undertake far-reaching changes: combat spam and bots, publish the algorithm, reinstate those expelled from the network, apply a more lax content moderation policy, promote paid subscription services and launch X, “the application for everything”, which sounds like an imitation of the Chinese WeChat.

The term to close the agreement expired this Friday, but for days everything seemed on track. This Wednesday, Elon Musk changed the description of his Twitter profile to proclaim himself chief tweeter and visited the company’s headquarters in San Francisco. In addition, his partners and the banks had been outlining the latest details and the movement of money for days. The term to execute the operation expired this Friday. Now, Musk owns Twitter.

It is the end point of a half-year soap opera that began seven months ago, when Musk, the world’s richest man, founder and largest shareholder of Tesla and SpaceX, began buying shares in the company. On April 4, he revealed that he had already acquired 9.2% of the capital of the social network. Musk, an active Twitter user who already has 110 million followers, commented on the network several times last March on aspects of Twitter’s business, platform and functionality, as well as its content moderation policies. Until then, it seemed that he was a simple user, but he was beginning one of the most bizarre business operations in memory and in which a good part of the milestones have been broadcast in public.

Musk contacted on March 26 with Jack Dorsey, founder of the network and who in November left his position as CEO and spoke with Egon Durban, one of the directors of Twitter, about his possible incorporation to the board of the Palo Alto company, to which he told him that he already had more than 5% of the shares. On the same March 27, Musk informed his interlocutors in the company that he was studying several options, in addition to entering Twitter’s advice, such as taking it off the stock market or even creating a competitor. He brought that same approach to the table in the first meeting with Parag Agrawal, CEO, along with other executives, on March 31. The insistence on terms and deadlines began to define Musk’s approach.

On April 2, the company offered him to join the board with some safeguards, such as not preparing an offer from within and not publicly criticizing the company. On April 4, Musk announces that he is the largest shareholder of Twitter, with 9.2% of the titles, and responds to the company that he is not willing to stop making public comments about the network, but is willing to agree to an agreement that limits his property to approximately 15%, and subject to the approval of the council in case of wanting to exceed it.

The next day, Musk and Agrawal announce the agreement in principle. On April 8, the council communicates that the effective appointment of this as a member of the same will be the following day. However, on April 9, Musk slammed the first door on his future company, announcing that he is not on the board and that, as he had threatened, he will try to get Twitter off the Stock Exchange with a purchase offer. .

On April 13, Musk communicates to his interlocutors his intention to acquire the company, for $54.20 per share in cash, a figure that is a nod to marijuana, associated with the figure 420, which was also the price chosen in his day by Musk to say that he was considering delisting Tesla. “It is my best and last offer and, if it is not accepted, I would have to reconsider my position as a shareholder. Twitter has extraordinary potential. I’m going to unlock it.” The next day, April 14, Musk publicly announces his proposal, valued at about 44,000 million dollars (a similar figure in euros).

On April 15, Twitter’s board adopts a plan to shield the company from a hostile offer, but begins to study the offer and demand financing guarantees. Musk announces on April 21 that he has the money. In addition, he states that he is willing to buy the company without a thorough prior review. (due diligence), against the usual practice in operations of this depth. After examining the situation, the Twitter board concludes that the offer is favorable and on the weekend of April 23 and 24, lawyers, banks and financial advisers negotiate against the clock. On the morning of the 25th the agreement is signed.

In his own message, he said that he intended to defeat the bots and verify the identity of all humans, but then he pretended to be surprised, claiming that there were more fake user accounts than the company declared.

Musk announced in May that he was putting the deal on hold, then said he was committed to it; then, that he could not rule out a price reduction, and later, that he would not continue with the operation if they did not show him that there were less than 5% of false accounts.

At the time, the economy was taking a turn for the worse, tech stocks had tumbled on falling ad revenue, and Musk was increasingly aware that he was paying too much for the purchase.

He got into an argument with Parag Agrawal in public. The head of Twitter opened an extensive thread on the difficulties of detecting false accounts, the work that the company does for it and how this estimate is reached that they are actually less than 5%, as the company has been announcing. To a technical, didactic and detailed reasoning, Musk replied with the smiley poop emoji.

The tycoon sent a letter on July 8 saying that he was breaking the purchase agreement because Twitter had too many false user accounts, despite the fact that he had always said that he was buying the social network, among other things, to clean it of spam, so it seemed more like an excuse to get out of the deal in the face of worsening market conditions. Twitter sued him to enforce the agreement. The lawsuit was forceful and the response from Musk’s lawyers was not very convincing.

With the case already open in a Delaware court, upon learning of a complaint from Peiter Zatko, the social network’s former head of security, Musk sent a second breakup letter in late August saying that the former executive’s revelations showed a breach of the merger agreements. And he still sent a third termination letter upon learning of the $7.75 million severance pay that Zatko himself received.

The process was getting ugly for Musk. Despite the requests to contribute to the cause, he was hiding part of the messages from him. Those that he has revealed already left him in a bad situation and his summons and requirements were also reaching his usual friends, associates and business partners. The last move was to try to negotiate a price reduction. Twitter was shut down. In the end, Musk’s lawyers sent a letter to Twitter admitting to going back to the original agreement if the process was closed. Twitter wanted assurances that it was not a new move.

This Wednesday, in addition to changing the description of his Twitter profile, Musk visited the company’s offices in San Francisco and uploaded a video to the network loading a sink. “Breaking into Twitter headquarters,” he wrote. “Met a lot of cool people on Twitter today,” put in another message. “Elon is in the San Francisco office this week meeting with people, walking the halls and continuing to immerse himself in the important work you all do,” Leslie Berland, head of marketing, wrote in a message to the template. “For everyone, this is just the beginning of many meetings and conversations with Elon, and you will all hear from him directly on Friday,” she added.

For Twitter workers, the arrival of Musk is a cause for concern, after it has been known that he has sent the message to investors that he plans to cut the workforce by 75%, which is now about 7,500 employees. Now, however, the tycoon has conveyed to some employees he has met with that he does not intend to do so. Musk also wants to multiply revenue and explore subscription avenues.

Musk’s plans aim to turn Twitter into some kind of all-in-one app. “The purchase of Twitter is an accelerator to create X, the application for everything”, he was the first tweet of the tycoon after returning to the plan to buy the social network for 44,000 million dollars. In the past, the businessman has shown his admiration for the Chinese application WeChat, which evolved from a messaging service to a multinational platform with means of payment, electronic commerce, health, subscription management and all kinds of services, almost essential for the daily life in China.

Musk proclaims himself “an absolutist of freedom of expression”. That, however, can mean that disinformation, fake news and hate messages proliferate. For example, the businessman is in favor of reinstating former President Donald Trump, who is now spreading his hoaxes on his own network, Truth Social. Despite this, in a message to advertisers released this Thursday, the tycoon seems to take a step back in fear that advertising will flee: “Obviously, Twitter cannot become a hell of freedom for everything, where you can say anything no consequences.”

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