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The Elon-Twitter Corporate Hostage Negotiation

Elon Musk
Photo by Maja Hitij/Getty Images
William D. Cohan
April 13, 2022

You’ve got to hand it to Elon Musk, the world’s richest man. He knows how to get attention, and he knows how to get what he wants. Since January 31st, Musk has spent around $2.6 billion in 43 separate open market purchases to obtain a 9.1 percent stake in Twitter. It’s larger than any other shareholder—with Vanguard and Morgan Stanley, as broker, a close second and third—but a mere 1 percent of his net worth, so pocket change. More notably, at least on Wall Street, is that Musk ignored the disclosure deadline and that he filed a Form 13G, implying that his investment was “passive” when he should have filed a Form 13D form, meaning that he was intending to be an “active” investor. The difference between a 13G filing and a 13D filing has always been pretty clear on Wall Street: 13G “good”; 13D “danger.” (He’s now being sued over his disclosure goof.)

Within days of announcing his stake, Twitter and Musk announced that he would be joining the Twitter board, with an initial term ending after the 2024 annual meeting in exchange for agreeing to cap his overall purchases of Twitter’s stock at 14.9 percent during his tenure, and for 90 days thereafter. This would have kept Musk inside the tent, which is better than the opposite, but either way that plan went kaput over the weekend when Musk informed Twitter that he declined the invitation after all. Instead, as he shared in a new 13D filing, he would be free to acquire as much Twitter stock as he wants, or to sell his stock whenever he wants.