Only his hairdresser knows for sure. Elon Musk’s bid to take Twitter private has mainly dropped out of the headlines, which has only dimmed speculation and interest rather than end it altogether. Musk’s public confrontation with current Twitter management over the estimations of bot content on the site had convinced many that Musk might be looking for a way out of the $44 billion bid, or at least looking for a discount.
Instead, it appears that Musk has spent the time building up his financial resources to execute the takeover as planned. The Washington Post reported yesterday that Musk has set aside some of the loans in favor of bringing in more investors in minority ownership:
A growing list of investors signing up to help fund the $44 billion takeover of Twitter are betting on one big thing: Elon Musk.
Though Twitter has spent years as an underperforming Silicon Valley punching bag, investors big and small are now scrambling for a piece of it, driven by optimistic revenue projections, their own strategic interests and fierce loyalty to a tech executive many see as infallible. …
The investors signing up are confident the deal will proceed, according to the people, despite Musk recently telling his more than 90 million Twitter followers the deal is on hold. Musk is personally vetting and approving each investor, according to one of the people.
After initially offering to acquire Twitter, Musk has seen his wealth take a hit with the drop in the stock market. He has committed more than $33 billion to buy Twitter, significantly more than his initial $21 billion equity commitment — lowering the amount of debt he would have to pull from banks to reach the agreed-upon price. The investors he has attracted would contribute to the equity batch, lowering his debt burden.
Initially, Musk lined up two large tranches of loans to cover nearly $25 billion of the asking price. That alone looked a bit tricky, as that debt overhead would require immediate servicing while Musk revamped the company for better profitability. By bringing in more investors in a limited partnership framework, Musk would probably gain more flexibility and certainly more time for his changes to produce the income he projects. That approach makes Musk look more serious about the deal as well as the price point.
However, these moves leave the New York Times’ Kara Swisher unmoved. She believes that Musk has trapped himself in a relationship with Twitter that resembles a bad marriage, and that he’s still looking to annul it:
Elon Musk swept Twitter off its feet in April, when he put in a bid to buy the company for $44 billion. But the impassioned beginnings of this acquisition have cooled down in the weeks since, as Musk has raised concerns about the inner workings of the company he agreed to buy essentially sight unseen (he did not conduct due diligence before he agreed to buy the social media platform). As the New York Times tech columnist Kevin Roose puts it, the deal is starting to look “like an arranged marriage that’s sort of going sour.” Musk has invoked concerns about spam and fake accounts on the site, as well as privacy considerations. And the billionaire has gone so far as to tweet that the deal is “temporarily on hold” before clarifying that he is “still committed to acquisition.” But a breakup between Musk and Twitter would make for a difficult, costly and very public divorce.
Swisher and her podcast guests Bill Cohan and Kevin Roose think Musk is still looking for an escape route. Roose puts the odds at 10-15% that Musk will have annulled the shotgun marriage by the time the October deadline rolls around, even with Musk’s recent moves:
I think the bots thing is a total pretense. He knew there was a bot problem. He has bots in his replies every time he posts anything. I mean, I think this deal is very strange to me. It feels a little like an arranged marriage that’s going sour. Everyone pretended to be OK with it. But now the date is getting closer, the flowers have been ordered, the caterers are hired, and the groom is getting cold feet. He is clearly nervous about this. He wants to find a way out. I do think the deal will eventually close because of some of the reasons that Bill mentioned. But I think it’s going to be a very awkward interim. And there’s still a chance — I would put it at maybe 10 percent to 15 percent — that he finds a way out of this deal.
Some of this analysis, however, rests on an assumption from all three that Musk simply isn’t a very serious person, especially with social media. Here’s Roose’s assessment, for instance:
He’s like someone who stumbled on to a PragerU YouTube video and emerges six months later just totally bought into the culture war. It almost feels like now his account is like if Ben Shapiro had a passing interest in satellites. And I do think that’s what’s motivating this.
He said that he’s motivated by the need to free Twitter of censorship. And I think his recent tweets make it fairly clear that he just thinks the service is way too censorious, way too woke, run by radicals and he wants to basically restore it to what he feels like it was before that.
There may be a strong element of truth to that. This Musk deal does look quite impulsive, at least, and the fact that the bot-content issue came up prior to the bid makes it look more so. This has always looked more personal than financial, which is why conservatives cheered Musk’s bid so enthusiastically. If social media platforms dance to the tune of billionaires, at least one platform would dance to the tune of a more friendly billionaire. Or so they hope, for now.
However, it’s foolish to write this bid off as unserious. Musk might be impulsive, but his instincts have been proven right in the past, even if his behavior hasn’t at times. The attraction of other investors in this bid strongly suggests that they see value in Musk’s business plans, even if his initial decision to buy the platform may have been impulsive and the plan more a product of reverse engineering. Musk has the resources to execute this deal if he wants it, and he has a track record of business success that at least makes this a realistic passion project, if nothing else.
But it’s a long way to October, too. At least the journey should be entertaining, if you’re not an investor on either side of this Twitter deal/bad marriage.