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Elon Musk will not join Twitter’s board of directors as he is forgoing a deal that would prohibit him from buying more than 14.9 percent of the company’s stock. Musk had agreed to join the board after purchasing 9.2 percent of Twitter’s shares, but Twitter CEO Parag Agrawal announced last night that Musk was withdrawing from the pending deal.
agrawal posted a note he sent to Twitter employees, who said:
We announced Tuesday that Elon will be appointed to the Board of Directors, pending a background check and formal acceptance. Elon’s appointment to the board would officially take effect on 4/9, but Elon announced that same morning that he would no longer be a member of the board. I believe this is the best. We have and will always value the input of our shareholders, whether they are members of our Board of Directors or not. Elon is our largest shareholder and we remain open to his input.
Musk revealed a week ago that he had bought nearly 73.5 million Twitter shares, which are now worth more than $3 billion. If the CEO of SpaceX and Tesla had adhered to the agreement to join Twitter’s board, he would have had to adhere to a share purchase limit as detailed in a filing from the Securities and Exchange Commission.
While Mr. Musk is a member of the Board of Directors and for 90 days thereafter, Mr. Musk will not, alone or as a member of any group, become the beneficial owner of more than 14.9 percent of the outstanding common stock of the Company. company at that time, including for these purposes economic exposure through derivative securities, swaps or hedging transactions,” Twitter wrote in the SEC filing.
Analyst: Musk likely to build “active stakes”
Musk will remain off the board, setting up “a ‘Game of Thrones’ battle between Musk and Twitter, which will likely see Elon adopt a more hostile stance towards Twitter and further expand his active stake in the company.” Wedbush analyst Dan Ives. wrote, as quoted by Barron’s and other media outlets.
Before offering Musk a position as director, Agrawal and board members had “a lot of discussions about Elon joining the board, and directly with Elon,” Agrawal wrote in his note to employees about Musk pulling out of the deal. “We also felt that having Elon as a fiduciary of the company, where he, like all board members, must act in the best interests of the company and all our shareholders, was the best way forward.”
Agrawal further wrote: “There will be distractions ahead, but our goals and priorities remain unchanged. The decisions we make and how we execute them are in our hands, nobody else’s.”
New Musk Tweet Asks: “Is Twitter Dead?”
On Saturday morning, Musk retweeted a list of the top ten Twitter accounts by number of followers, add“Most of these ‘top’ accounts rarely tweet and post very little content. Is Twitter dying?”
Musk “spent much of the weekend tweeting criticism, suggestions and apparent jokes on Twitter,” The Wall Street Journal noted. The tweet asking if Twitter is going to die was still up today, but Musk deleted others, “including[ing] one proposing that people who sign up for Twitter Blue, the company’s premium subscription service, should be given an authentication check. Another deleted tweet suggested Twitter convert its San Francisco headquarters into a homeless shelter “because nobody shows up anyway.”
Board seat would “weaken” Musk’s voice
According to Reuters, sources said “that Musk had already asked Twitter for a board seat before the company’s invitation.” Reuters also paraphrased anonymous sources by saying that “the news of Musk taking a board seat has caused some Twitter employees to panic about the future of the social media company’s ability to moderate content.”
Before revealing his 9.2 percent stake in the company, Musk wrote: tweets questioning Twitter’s commitment to “principles of free speech†
CFRA Research analyst Angelo Zino wrote last week that “Musk’s actual investment is only a very small percentage of his assets, and a total buyout should not be ruled out.” Following Musk’s turnaround in joining Twitter’s board, Zino wrote, “We thought the equity cap and board seat were originally meant to handcuff Musk in many ways and think he’s unlikely to be the type of person that’s just now. bet will sell and walk away.”
“I think he realized that being on the board will diminish his vote, and that’s absolutely the last thing he wants,” quoted Reuters Wells Fargo analyst Brian Fitzgerald.
