A behind-the-scenes look at Elon Musk’s Twitter acquisition

There’s a lot of behind-the-scenes work involved in mergers and acquisitions that the public usually isn’t privy to. But the inside story on how Tesla CEO Elon Musk acquired Twitter is quite juicy and over the top.

The new report, The inside story of how Elon Musk won Twitter—and could still lose it, written by Fortune’s team of finance journalists, takes a deep dive into how Musk is putting everything on the table in his bid to buy Twitter. The world’s richest man tweeted his way to what would be the third-biggest tech takeover deal of all time. 

Here’s some of what the team found:

“Musk granted the lenders a deep protective cushion that was essential in clinching the deal. In a detail that has not been previously reported, Fortune has learned that Musk provided a blanket, personal guarantee on the entire $12.5 billion loan secured by his Tesla shares. Hence, if Musk is unable to repay the loan by selling the Tesla shares he’s using as collateral, the creditors could call on anything he owns, including his other Tesla holdings, his equity in Twitter, his 46% holding in SpaceX, his stake in the Boring Co., and sundry personal assets.”

Yes, this isn’t a run-of-the-mill acquisition. Musk is laying it all on the line for tweets. The finance team set out to answer some important questions:

“How can a company that owns the public and private data of millions of users switch owners with zero public scrutiny? Is a billionaire with an agenda—his existing set of business interests; his own definition of ‘free speech’—the right person to control an online platform that has effectively become a digital public square, beloved by politicians, journalists, and activists? And will Musk’s single-minded pursuit of Twitter significantly reduce the market value of Tesla—the biggest source of Musk’s own incredible wealth?”

Since April 25, the day the Twitter deal was publicly announced, the company’s stock has fallen about 13%. Some Tesla investors aren’t happy. They feel that in reaching for Twitter, a relatively small, slow-growing company business, Musk is endangering the value of a world-changing company. “It’s all anyone’s talking about,” one investment advisor at a London-based investment bank told Fortune about the deal.

The finance team’s report chronicles Musk’s complete journey from his 9.2% stake in Twitter, made up of 73.5 million shares (which he started building in January) to the acquisition announcement on April 25. 

Later that day, Twitter CEO Parag Agrawal and Twitter’s chairman Bret Taylor held an all-hands meeting with employees, who to this point had largely been left to follow the drama in the media and, of course, on Twitter. “They’ve had a town hall with employees and some of the conversations have been leaked to the press,” Lars Schmidt, founder of HR recruiting firm Amplify, told Fortune. “A lot of employees raised some concerns about the potential or perceived direction that Elon might take Twitter as a private company. When you hear the Twitter executives responding to that, much of it is—they don’t know what the direction would be. The reality is we just don’t know. And I think that in the absence of certainty, speculation fills that void.”

But there’s one more outstanding question, and it’s a major one: Will this deal actually get done? 

Fortune’s finance team’s assessment: “A close analysis of the deal’s financing demonstrates there is still a very real chance that this deal could fall apart, leaving the world’s richest man with a $1 billion tab to pay.”

You can find out what experts have to say about that question, and also read the complete report that our team worked on here. I’d love to hear what you think of Musk’s pursuit—a stroke of genius, or a bridge too far?

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

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Going deeper

EY’s Entrepreneurial Winning Women program, launched in 2008, spotlights women founders that built small companies with the potential to scale larger. Winning Women serves as a competitive executive education and networking program for high-potential women entrepreneurs. Women selected for the program receive advice, resources and access to help grow their business. Nominations and applications are being accepted through May 6.

Leaderboard

Tracey Perini was named CFO at Fitch Group, a financial information services with operations in more than 30 countries. Perini, who is based in New York, replaces Ted Niedermayer, who was appointed president of Fitch Solutions in September. Perini joins Fitch from Goldman Sachs, where during a 22-year career she held a variety of leadership roles including CFO of operations and chief of staff to the chief administrative officer. More recently, Perini was responsible for the CFOs of the engineering, control and finance divisions, and led the financial planning and analysis transformation and spend management functions.

Duston Williams was named CFO at Arctic Wolf, a security operations company, effective immediately. Gregor McCole, Arctic Wolf CFO for the past three years, will lead financial planning and analysis (FP&A) as SVP of FP&A. Williams will report to president and CEO Nick Schneider. Williams brings 40 years of technology and finance leadership experience to Arctic Wolf. Most recently, he served as CFO of Nutanix, Inc. (Nasdaq: NTNX), which he led through an IPO in 2016. Prior to that, he helped take two technology companies public, including Gigamon Inc. (NYSE: GIMO) and Infinera Corporation (Nasdaq: INFN).

Overheard

“In my life, I try and avoid things that are stupid and evil and make me look bad in comparison to somebody else—and bitcoin does all three.”

—Berkshire Hathaway Vice Chairman Charlie Munger bashes bitcoin at the company's annual shareholder meeting on April 30 in Omaha, Neb., as reported by CNBC.