Elon Musk’s $44B Twitter Deal Is On Pause: Here’s How it All Came Together

Billionaire Elon Musk wanted to know about the future of social media so he contacted Twitter co-founder Jack Dorsey in March. Dorsey had spoken publicly and with the board before about decentralizing social media so users get more control over their data and what content they see. 

The conversation with Dorsey was the start of discussions Musk had with Twitter board members and executives before he eventually struck a deal in April to buy the influential social network for $44 billion, according to a filing this week with the US Securities and Exchange Commission.

The filing includes a timeline of the conversations that Musk had with Twitter board members and CEO Parag Agrawal, providing more details about how the deal came together. Musk’s efforts to acquire Twitter has been a bumpy one. Musk rejected a seat on Twitter’s board before offering to take the company private. At one point, it seemed like Twitter was going to fight Musk’s offer. Musk also had a conversation with Dorsey in early April in which the co-founder said he thought Twitter, a publicly-traded company, would be better off as a private company, the filing shows.

The saga between Musk and Twitter still isn’t over. Musk said this week the deal is on hold because he doesn’t think Twitter’s statement that fewer than 5% of Twitter’s 229 million daily users in the first quarter are fake or spam is accurate. He’s also said that a deal at a lower sales price isn’t out of the question, raising questions about whether Musk will eventually back out of buying Twitter.

Twitter’s board has urged shareholders to vote for the deal. Here’s what you need to know:

Why does Musk want to buy Twitter?

Musk is an avid user of the service but also one of its loudest critics.

Musk tweeted a poll to his followers in March that asked whether users believed Twitter was protecting free speech. He said the poll results, in which roughly 70% of 2 million respondents answered “no,” would be “very important.” 

“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy. What should be done?” Musk said in a follow-up tweet. Then he made an offer to buy Twitter, noting that he believed Twitter needed to be private to accomplish his goal.

The guarantee of free speech in the US Constitution’s First Amendment applies to the government censoring speech but not to companies such as Twitter, which have their own rules about what isn’t allowed on their sites.

Musk referenced free speech again when the agreement was made public. He also said he wanted to enhance Twitter with new features and promised he would make the service’s algorithms open source, defeat spam bots and authenticate all humans.

“Twitter has tremendous potential,” Musk wrote. “I look forward to working with the company and the community of users to unlock it.”

Progressives have criticized social media companies for failing to crack down on harmful content such as hate speech and harassment. Conservatives claim their speech is being censored. (Twitter has long denied allegations it censors conservatives.) 

On April 19, Musk tweeted he thinks social media policies “are good if the most extreme 10% on left and right are equally unhappy.” He’s also said he would reverse the ban on former US President Donald Trump who was booted from the platform after the Jan. 6 Capitol Hill riots because of concerns about inciting violence. Trump has said he doesn’t plan to return to Twitter even if the company lifts the ban.

What has Twitter’s response been?

Initially, it seemed like Twitter was going to turn down the offer but the board started to take it more seriously when Musk offered details about how he would finance the deal. The company had adopted a defensive strategy known as the “poison pill” that would make it tougher for Musk to add to his stake in the company. The tactic allowed Twitter to accept a competing offer, if one emerged.

Twitter co-founder Jack Dorsey tweeted on April 15 that “as a public company, twitter has always been ‘for sale.’ that’s the real issue.” Twitter has dealt with leadership changes, layoffs and activist investors as a public company. After Twitter announced the deal, Dorsey said he didn’t believe that anyone should own or run Twitter but taking it back from Wall Street is the “correct first step.”

“Solving for the problem of it being a company however, Elon is the singular solution I trust,” Dorsey tweeted. “I trust his mission to extend the light of consciousness.”

How would Musk pay for Twitter?

Musk is reportedly the richest person in the world, with a net worth of $251 billion.

In an SEC filing on April 20, Musk said he had secured about $25.5 billion in debt financing through Morgan Stanley and other financial institutions. Musk said he had personally committed about $21 billion in equity financing

What happens next?

The deal still needs to be approved by shareholders, and there’s speculation that Musk could back out. Terminating the deal, though, would cost Musk $1 billion because of a termination fee that’s part of the agreement, according an SEC filing on April 25.

The takeover attempt will likely lead to more leadership changes within Twitter. Musk is expected to serve as temporary CEO after the deal closes, CNBC reported. Parag Agrawal, who took over from co-founder Jack Dorsey in November, is expected to stay until the sale is completed. Musk also said he’d rein in executive and board pay, in addition to figuring out new ways to make money, according to Reuters, which cited anonymous sources. Last week, two longtime Twitter executives said the CEO asked them to leave their jobs.

Bloomberg reported that the entrepreneur had suggested job cuts as he pitched the deal. He also reportedly told banks that Twitter needed to get influencers and celebrities more active on the platform.