Twitter and Mr. Musk have so far worked together to get the deal done, a person with knowledge of the matter said, though that dynamic could change quickly.
How Elon Musk’s Twitter deal went down
A successful business. Elon Musk, the world’s richest man, capped off what appeared to be an unlikely attempt by the notorious mercurial billionaire to buy Twitter for around $44 billion. Here’s how the case unfolded:
Mr. Musk’s hand could be strengthened by the uncertainty his bid has created within Twitter, which could potentially make it harder for the company to continue independently. The company has struggled to add users and generate more revenue, and on Thursday Mr Agrawal fired two senior executives, halted new hires and pledged to cut spending.
In his tweets on Friday, Mr. Agrawal said he was making changes because the deal with Mr. Musk was “not an excuse to avoid making important decisions for the health of the business”. He added that Twitter was part of an industry that was “in a very difficult macro environment – right now.”
Mr Musk has pledged to use his personal fortune to fund the Twitter deal, a plan that has been affected by a recent drop in stock prices, including that of Tesla. Tesla shares have fallen nearly 30% in the past month. Mr. Musk is both selling Tesla shares and pledging them as collateral for personal loans to raise cash.
If a deal were to be struck, Twitter’s business challenges could force Mr. Musk to dip deeper into his Tesla stock to plug any financial holes. And any problems at Tesla that cause its stock to fall far enough could trigger covenants in Mr. Musk’s personal loans that would require him to add more collateral, limiting his ability to invest in Twitter.
Tesla shares rose on Friday after comments from Mr. Musk.
The swings in Twitter and Tesla shares that followed Mr. Musk’s tweets could draw attention. The Securities and Exchange Commission charged Mr. Musk with securities fraud in 2018 after he falsely tweeted that he had secured financing to take Tesla private, sending the automaker’s shares up 6%. Mr. Musk and Tesla paid a $40 million fine for the tweet. Legal action against Mr. Musk over the tweet is ongoing.
“If I were his attorney, I would spend the morning scrambling to figure out what the implications of all of this are under federal security law,” said Faegre Drinker partner and former Securities attorney Marc Leaf. and Exchange Commission.