A new filing with the Securities and Exchange Commission sheds light on the Twitter board’s early conversations with billionaire Elon Musk as he decided to join the board, and later, abandon that plan and try to take over the company.
Tuesday’s filing reveals a timeline of conversations from Twitter’s perspective in the lead-up to the deal, beginning on March 26, when Musk reached out to former CEO Jack Dorsey “to discuss the future direction of social media.” That same day, Musk also reached out to Twitter board member Egon Duban and the two discussed the possibility of Musk joining the board.
The following day, Musk spoke with Twitter board chair Bret Taylor and CEO Parag Agrawal about his interest in Twitter, saying he was considering joining the board, trying to take Twitter private or starting a competitor.
After meetings between board members with Musk that included lawyers and bankers, they reached an agreement on Musk joining the board in early April, contingent on a background check and other customary procedures.
On April 4, Musk reached out to Dorsey about his perspective on Twitter. Dorsey told Musk he personally believes Twitter would be better equipped to focus on execution as a private company, according to the filing. Musk asked if Dorsey would stay on the board even though he had already been set to leave, and Dorsey declined.
Soon after that conversation, the board completed Musk’s background check and his appointment to the board was set to go into effect on April 9. Leading up to that date, Musk and Agrawal continued discussing Twitter’s business and products in anticipation of his new role on the board. But before the appointment came into effect, Musk told Taylor and Agrawal he would no longer be joining the board and would instead make an offer to take Twitter private.
That set off a frenzied few weeks where Musk made what he called his “best and final” offer to buy Twitter at $54.20 per share. The board later adopted a so-called poison pill or shareholder rights plan to prevent Musk from moving forward with a hostile takeover. But he then floated the idea of a tender offer, appealing to shareholders directly in a takeover, which again seemed to impact the calculus of the Twitter board’s decision on whether the accept Musk’s initial offer.
In the deliberations over the bid, the filing reveals, Twitter’s board considered its historical challenges in growing the business and also determined it was “unlikely” other potential acquirers would be interested or able to buy Twitter based on regulatory, financial and execution risks. They also considered that Musk could start an unsolicited takeover and that Musk’s first offer was likely “the best value that Twitter could reasonably obtain” from him.
Ultimately, the board agreed to the deal. Later, on May 5, Musk publicly revealed he was speaking with existing stockholders, including Dorsey, about retaining equity in the newly merged company. According to the filing, Dorsey told the company about these conversations and that he could end up holding equity in the resulting firm.
Since Musk made the offer, Twitter’s stock has fallen along with the broader market, raising questions for investors about whether the deal can still make it across the finish line. Musk hinted at an event that he could seek to renegotiate the price.