Why did Elon Musk want Twitter in the first place? : NPR



AYESHA RASCOE, HOST:

The battle between Elon Musk and Twitter isn’t going anywhere anytime soon. In April, the billionaire businessman persuaded reluctant Twitter board members to sell the social media company for $44 billion. But again this week, Musk backtracked, complaining that Twitter hadn’t provided the information he requested. Felix Salmon is Chief Financial Correspondent for Axios. He is now joining us from New York. Welcome.

FELIX SALMON: Thank you very much. Great to be here.

RASCOE: Elon Musk’s attorney says Twitter doesn’t give specific information about the number of fake accounts on Twitter. Why would bots be important in determining whether Twitter is profitable or not?

SALMON: So if a bot sees ads that advertisers have paid for, then that page view is basically scamming the advertiser. So that’s the point that Elon is kind of trying to make because he’s saying that if a lot of bots are seeing ads that Twitter says are seen by humans, then they’re making a lot of money under fake pretenses from people advertising on Twitter.

RASCOE: Was he able to look into that before agreeing to buy Twitter? Like, why make an offer?

SALMON: Not only could he have examined it, but he did. And that’s the reason he said he wanted to buy Twitter. He said, I think I can improve Twitter by getting rid of these bots and spam accounts. It wasn’t until after that big tech stock market crash that he realized that the amount he was paying for Twitter was actually more than he could really afford and was also more than he was. that it was really worth. And so he started looking for ways to get out of the deal.

RASCOE: Elon Musk is one of the richest men in the world, isn’t he? Why couldn’t he find the money? Why couldn’t he throw pillows or something and just save the money, right? He doesn’t have it?

SALMON: It’s really – it’s a – yeah. Basically, yes. That’s a very good question, isn’t it? So when it comes to him being the richest man in the world, it’s not money he has in a bank account at Wells Fargo, is it? Most of it is in the form of Tesla stock. He owns a lot of Tesla stock, but a lot of it was pledged to other banks because he borrowed against them. He also owns a bunch of stock in SpaceX, his space company. And these are all the less liquid as they are not listed on the stock exchange. He would need to sell a huge amount of his stock in Tesla or SpaceX or both, and he really doesn’t want to do that to buy Twitter.

RASCOE: Is it kind of like, in a real person way – it’s like I could probably get the money, but I don’t want to – it’s going to be too difficult.

SALMON: Imagine walking into a store and seeing an amazing sofa, and you’re like, I want this sofa. And they sign the thing and they say, OK, we’ll custom make it for you. We will deliver it in six months. And you’re like, perfect. I’ll pay you in six months. But then you realize, as that six-month date comes up, that the banks don’t really want to lend you money out of that equity. So you would actually need to sell the house to buy the couch, and that defeats the purpose. And so you then phone the store, and you say, actually, too bad. I don’t want this couch after all. And then the store says, well, actually, you have a binding contract under Delaware law that says you have to buy the couch. And if you have to sell your house to buy the sofa, then you have to sell your house.

This is what is happening. Everyone moves to Delaware, basically – a group of lawyers are going to end up in Delaware to fight in front of a judge.

RASCOE: Yeah, because Twitter said they were going to fight that. And, you know, from the lawyers you’ve talked to, do they have the upper hand, or is this really kind of unprecedented territory?

SALMON: Most of the independent lawyers who look at this question say, yes, Twitter has the upper hand. The merger agreement was drafted in such a way that it would not specifically allow Elon Musk to make this kind of move.

RASCOE: Do we know what will happen next?

SALMON: When you have so many lawyers making so many dollars, Ayesha, the only thing I can tell you for sure is, no, we don’t know what’s going to happen next. We know there is going to be a legal battle. And if this court case goes all the way, then at some point a judge will side with one side or the other and say, you know, Elon has to pay Twitter a billion dollars or Elon has to buy Twitter either way or Elon owes nothing to anyone – nothing to anyone. There are a lot of different possible outcomes, that’s for sure.

RASCOE: Felix Salmon is Axios’ principal financial correspondent. Thanks for join us.

SALMON: Thank you.

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