Elon Musk takes control of Twitter, fires top executives

Published: 08:43 AM, 28 Oct, 2022
Elon Musk takes control of Twitter, fires top executives
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Elon Musk took control of Twitter and fired its top executives late Thursday in a deal that puts one of the leading platforms for global discourse in the hands of the world's richest man.

Musk sacked chief executive Parag Agrawal, as well as the company's chief financial officer and its head of safety, the Washington Post and CNBC reported citing unnamed sources.

Agrawal previously went to court to hold the Tesla chief to the terms of a takeover deal he had tried to escape.

The reports came hours before the court-appointed deadline for Musk to seal his on-again, off-again deal to purchase the social media network.

Musk tweeted earlier in the day that he was buying Twitter "because it is important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner."

Twitter did not immediately reply to a request for comment on the departure of its top executives, but the platform's co-founder Biz Stone thanked the trio -- Agrawal, Ned Segal and Vijaya Gadde -- for their "collective contribution to Twitter."

"Massive talents, all, and beautiful humans each."

- 'Chief Twit' -

The closure of the deal marks the culmination of a long and drawn out back-and-forth between the billionaire and the social network.

Musk tried to step back from the Twitter deal soon after his unsolicited offer was accepted in April, and said in July he was canceling the contract because he was misled by Twitter over the number of fake "bot" accounts -- allegations rejected by the company.

Twitter, in turn, sought to prove Musk was contriving excuses to walk away simply because he changed his mind.

After Musk sought to terminate the sale, Twitter filed a lawsuit to hold Musk to the agreement.

With a trial looming, the unpredictable billionaire capitulated and revived his takeover plan.

Musk signaled the deal was on track this week by changing his Twitter profile to "Chief Twit" and posting a video of himself walking into the company's California headquarters carrying a sink.

"Let that sink in!" he quipped.

He even shared a picture of himself socializing at a coffee bar at Twitter headquarters earlier in the day Thursday.

Musk said during a recent Tesla earnings call that he was "excited" about the Twitter deal even though he and investors are "overpaying."

- Twitter free-for-all? -

Some employees who would prefer not to work for Musk have already left, said a worker who asked to remain anonymous in order to speak more freely.

"But a portion of people, including me, are willing to give him the benefit of the doubt for now," the employee said.

The idea of Musk running Twitter has alarmed activists who fear a surge in harassment and misinformation, with Musk himself known for trolling other Twitter users.

But Musk said he realizes Twitter "cannot become a free-for-all hellscape where anything can be said with no consequences."

Musk has vowed to dial content moderation back to a bare minimum, and is expected to clear the way for former US president Donald Trump to return to the platform.

The then-president was blocked due to concerns he would ignite more violence like the deadly attack on the Capitol in Washington to overturn his election loss.

Far-right users were quick to rejoice on the network, posting comments such as "masks don't work" and other taunts, under the belief that moderation rules will now be relaxed.

"Free speech will always prevail," tweeted Republican Senator Marsha Blackburn of Tennessee, prompting replies including "says the party that bans books."

How Musk financed Twitter takeover

In looking for ways to pay for his takeover of Twitter, Elon Musk has offered up money sourced from his own personal assets, investment funds and bank loans, among others.

Here are the financing details for the deal, which was finalized Thursday.

- Musk's own money -

At first, the Tesla head had hoped to avoid contributing any more than $15 billion of his personal money to the $44 billion deal.

A large part of that, around $12.5 billion, was set to have come from loans backed by his shares in the electric car company -- meaning he would not have had to sell those shares.

Ultimately, Musk abandoned the loan idea and put up more funding in cash. The 51-year-old ended up selling around $15.5 billion worth of Tesla shares in two waves, in April and in August.

In the end, the South African-born billionaire will personally cough up a little more than $27 billion in cash in the transaction.

And importantly, Musk, who Forbes magazine says is worth around $220 billion, already owns 9.6 percent of Twitter in market shares.

- Investment funds -

The total sum of the deal also includes $5.2 billion from investment groups and other large funds, including from Larry Ellison, the co-founder of software company Oracle, who wrote a $1 billion check as part of the arrangement.

Qatar Holding, which is controlled by Qatar's sovereign wealth fund, the Qatar Investment Authority, has also tossed capital into the pot.

And Prince Alwaleed bin Talal of Saudi Arabia transferred to Musk the nearly 35 million shares he already owned.

In exchange for their investments, the contributors will become Twitter shareholders.

- Loans -

The rest of the money -- about $13 billion worth -- is backed by bank loans, including from Morgan Stanley, Bank of America, Japanese banks Mitsubishi UFJ Financial Group and Mizuho, Barclays and the French banks Societe Generale and BNP Paribas.

According to documents filed with the US Securities and Exchange Commission, Morgan Stanley's contribution alone is about $3.5 billion.

These loans are guaranteed by Twitter, and it is the company, not Musk himself, which will assume the financial responsibility to pay them back.

The California company has so far struggled to generate profit and has worked at an operating loss over the first half of 2022, meaning the debt generated in the takeover could add even more financial pressure to the social media platform's already shaky position.

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