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

May 2, 2022, 10:07 AM UTC

Good morning,

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 itwritten 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

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