In order to fully comprehend our current juncture in the Twitter saga, it’s worth recalling how masterfully Elon Musk performed the first few stanzas. Between January and March, he stealthily accumulated a $2.64 billion stake in Twitter, which gave him more than nine percent of the company. Nobody had a clue he was doing this, except probably for the Wall Street traders who helped him do it, and they were smart enough to keep quiet. Then he filed his paperwork, fended off a feckless poison pill, and pulled together, seemingly effortlessly, the commitments for the $44 billion he would need to pay the Twitter shareholders that $54.20 per share in cash that he promised.
Elon was a total Jedi. He arranged for senior debt financing. He arranged for his margin loan on his Tesla stock. He committed to providing $21 billion of equity, without naming the sources of that equity. And he elegantly put the Twitter board in a position where it would have no choice other than to accept his offer. After all, there would be no way that Twitter’s financial advisers—Goldman Sachs, JPMorgan Chase, and Allen & Co.—could legitimately argue the deal was not fair to the Twitter shareholders from a financial point of view.
And of course they didn’t. The $44 billion was an amazing deal, especially for a company that at best was making $1 billion of EBITDA a year. Forced into a corner by Elon’s chess moves, the Twitter board quickly capitulated to the inevitable and entered into a merger agreement with him to buy the company. This was not the Elon of the SolarCity deal buffoonery or the “funding secured” to take Tesla private at $420-a-share debacle. This was a buyer who seemed well advised by Morgan Stanley. I see some of the fingerprints of my old boss, Rob Kindler, now a vice-chairman at the firm and the global head of its M&A group.