We may soon look back at this week as the decisive moment for Elon Musk’s takeover of Twitter. Yes, for real this time, folks. And this is just Round 2 of the Elon Musk Shenanigans Watch!
On Thursday night, Bloomberg reported that there’s been a vibe shift, if you will, in the talks between the Tesla CEO and the hard-hit social network. Internal sources told Bloomberg that “talks between the two sides have turned cordial and are focused on closing the transaction rather than litigation.” In other words, Musk is (once again) resolving not to battle the deal, and Twitter is trying to meet his demands in hopes of wrapping this whole thing up by Oct. 28—the deadline imposed by a judge at the Delaware Court of Chancery. Per those terms, if the deal falters again (which could still happen—a week is an eternity in Elon time!), Twitter and Musk will be forced to duke it out in court next month.
But neither side really wants that, especially Musk, who doesn’t want to be deposed. So it makes sense they’re working hastily to put a stamp on things. Negotiations stalled earlier this month after Musk demanded $13 billion in debt financing, in order to meet financial commitments for the initial $54.20-per-share Twitter price (adding up to $44 billion). Since a number of banks—including Morgan Stanley, Bank of America, Barclays, and more—committed to provide said financing back in April, they’re basically still on the hook, even if they potentially lose, uh, up to $500 million on this.* The Oct. 28 deadline came about in part because that’s the date, Musk told the Delaware court, when the banks could raise the needed cash and swoop in. They might just be on track; per Bloomberg, “one of the banks has told its staff to expect a borrowing notice from Musk on Tuesday.”
While we still don’t know what fueled this vibe shift, there were other hints this week that this could really, finally get done. On Monday, Twitter froze all equity trades granted to its employees, “in anticipation of the closing of the pending acquisition of Twitter by an entity controlled by Elon Musk.” On a Wednesday earnings call for Tesla (which didn’t paint the best monetary picture for that company) Musk said he’s “excited about the Twitter situation,” despite all his prior attempts to sabotage it. He also stated that, while he and other investors are “obviously overpaying” for Twitter, the social network has “incredible potential” that’s an “order of magnitude greater than its current value.” (Those investors could include Oracle co-founder Larry Ellison and a troubled crypto firm, among others—more on that in a bit.) Ironically, the call led to a rise in the price of Twitter’s stock, above the per-share level in Musk’s agreement, and subsequent fall in Tesla value—not great, since it’s likely Musk will have to sell off more Tesla shares to see this Twitter thing through.
And on Thursday, the Washington Post publicized internal company documents spelling trouble for Twitter employees: Musk once told probable investors that he planned on axing 75 percent of the platform’s workforce, whittling a 7,500-person staff to just around 2,000. (After the report went public, a top Twitter lawyer told staffers that “the company did not have any confirmation from Musk about his plans.”) Apparently, Musk would like to trim the “bloat” of the platform by dismissing lowly rated workers, and take on “more effective workers and profitable innovations” like a subscription model. It’s also likely he’d weaken content moderation practices so as to pursue his dream of “free speech maximalism” and allow controversial figures like Donald Trump and Kanye West to post how they’d like. (On Tuesday, he posted and then deleted a meme depicting those two plus himself as the Three Musketeers.)
But! Just one more wrinkle has popped up: that whole pesky issue of international diplomacy. In a separate story Thursday, Bloomberg also reported that Biden administration officials are considering subjecting the Twitter deal to a national security probe, due in large part to Muskian weirdness around the Russia-Ukraine conflict. For the past few weeks, for whatever reason, the tech titan has weighed in time and again on the war, by proffering an ill-advised peace plan and threatening to yank funding for his Starlink venture’s internet service for Ukraine. He’s also making plans with a few Twitter-deal investors from countries not exactly in the United States’ good graces: a prince of Saudi Arabia, the sovereign wealth fund of Qatar, and the embattled cryptocurrency exchange Binance. That crypto juggernaut was originally based in China, shared user data with the Kremlin, and was investigated last year by the Internal Revenue Service. (Speaking of China, earlier this month Musk proposed that Taiwan cede all sovereignty to the Xi Jinping government. Hmm!) Considering Musk’s sloppy foreign policy punditry has earned praise from both Chinese and Russian government officials, and Twitter has previously been infiltrated by a Saudi agent, it makes sense the U.S. government doesn’t wish for someone they contract with to engage in business that may be opposed to its interests.
Shenanigans Ruling: So, it really does seem like Twitter and Elon Musk are nearing the end of this saga. Twitter’s leadership is happy to offload the struggling company (and the burden of dealing with Musk), and Musk may finally be cleared to put up the money, despite his own plummeting fortunes. Again, though, we still have a week before anything needs to be signed. And the federal government is likely right to be concerned about Musk’s foreign entanglements, although considering whom we’re dealing with here, it’s probably less the case that Musk is a nefarious sleeper agent than a clumsy attention seeker who’ll take the cash wherever he can get it. There are still messy times ahead.
Correction, Oct. 21, 2022: This piece originally misstated that banks stand to lose up to $500 billion on their commitment to debt-financing Musk’s Twitter deal. They stand to lose up to $500 million.