After weeks of stalemate, Twitter's board made another major concession this week, agreeing to authorize Mr Musk's team to view Twitter's internal operating data in order to identify the size of fake accounts on the platform. This is the Nth time in the past two months between the two sides, Musk once again seems to have the upper hand.

The acquisition, like a soap opera with twists and turns, is destined to be written into a business school course. Often it seems to be a foregone conclusion, but it is always a new variable; the two sides take hands back and forth, and the prospect is still uncertain. But if Mr Musk could go back to April 25th, he might persuade himself to be cautious before signing the agreement, contented at the time, because he had jumped into a "big pit".

Step by step in the first half

The first half of the deal was a step-by-step move by Musk and it was inevitable. From the end of January to the end of March, Musk quietly acquired a 9.2% stake in Twitter on the open market for $2.6 billion, making him the largest shareholder in Twitter. After buying enough shares, Musk began to campaign on the Twitter platform at the end of March, privately approached the Twitter board to find out his intention, and finally announced his shareholding on April 4.

Under the banner of "defending freedom of expression", Musk made a $44 billion takeover offer to Twitter's board of directors on April 14. Despite being resisted by the Twitter board's "poison pill", the world's richest man saw the fatal weakness of the board's lack of voting rights and joined forces with many institutional investors to raise acquisition funds to put public pressure on the Twitter board to change its attitude. finally signed a takeover agreement with Musk on April 25.

At that time, Musk seemed satisfied with his wish, and Twitter was in the bag. The outside world is more concerned about how he will transform the social media platform after he takes Twitter into account. the focus of American society is whether Musk will overturn Twitter's current content control policy. let former President Trump and many right-wingers return to Twitter.

But the smug richest man in the world may not have thought that there is still a second half of the takeover contest, and the situation will change. As the macroeconomic situation began to cool in May, the stock market plummeted and Musk's personal wealth shrank sharply, along with Tesla, Inc.. The real battle around the acquisition has only just begun, with a variety of commercial and political forces competing behind the scenes.

From the signing of the acquisition agreement on April 25 to the beginning of May, Mr Musk was pushing ahead with acquisition financing step by step. His initial plan for the $44 billion acquisition was to borrow $13 billion from the bank, use Tesla, Inc. 's equity mortgage of $12.5 billion ($65 billion worth of Tesla, Inc. shares) and raise another $21 billion in cash.

Musk cashed out $8.5 billion by selling Tesla, Inc. shares at the end of April and actively brought in other investors, raising more than $7 billion from nearly 20 billionaires and institutional investors. Among them, his good friend, Oracle Corp founder Ellison personally contributed 1 billion US dollars.

The situation changed suddenly in the second half.

The big shift came on May 4, when the Fed announced an one-off rate hike of 50 basis points under severe inflationary pressures at a 40-year high, the biggest rate hike since 2000. In addition, the Fed announced that it was starting to shrink its portfolio in an attempt to reduce inflation through a two-pronged approach.

The technology stocks that have led the rise in the stock market over the past two years have been among the worst-hit sectors as investors look for safe havens. Tesla, Inc. 's share price plummeted 8% the next day, and then plummeted from $952 to $625 on may 24, wiping out 1/3 of its market capitalization. Although it has slowly recovered to its current level of $725 over the past two weeks, it is still a big gap from $1145 in early April.

In other words, since Musk announced his stake in Twitter and launched a hostile takeover, Tesla, Inc. 's market value has evaporated by more than 1/3, and Musk's personal wealth has shrunk by more than $60 billion over the same period. This may explain why Musk publicly broke face with Gates, the former richest man in the world.

Gates not only invested $500m to short Tesla, Inc. 's share price, but also publicly spoke out and funded opposition to Musk's acquisition of Twitter. After Musk announced his acquisition of Twitter, 26 US NGOs publicly called on advertisers to boycott Mr Musk's acquisition of Twitter, including 11 organizations that have long been supported by the Gates Foundation. they received a total of $460 million from the Gates Foundation.

The fall in Tesla, Inc. 's share price has also brought more trouble to Musk. Musk previously used the margin loan secured by Tesla, Inc. 's equity to set the margin line of US $740, that is, if Tesla, Inc. 's share price falls below this price, it means that Musk's Tesla, Inc. equity used as collateral is no longer worth enough, and he needs to mortgage more equity. Or sell the equity to cash in to cover the position. In mid-May, Tesla, Inc. 's share price has fallen below this margin line.

In addition, Tesla, Inc. executives can only qualify for up to 25 per cent of their shares. Musk currently holds 170 million Tesla, Inc. shares and 73 million options. Although he can't sell options to cash out, he can use it as a mortgage. By the end of last year, Musk had mortgaged more than 80 million Tesla, Inc. shares for margin loans, approaching the stock mortgage quota, meaning he could no longer mortgage more shares to cover his positions.

Affected by the sharp fall in Tesla, Inc. 's share price, Musk had to reduce the equity margin loan portion of the Twitter acquisition. On May 26th, Mr Musk filed regulatory filings to raise the personal financing portion of the $44 billion financing to $33.5 billion and to seek additional financing guarantees, thereby abandoning the use of margin loans in the Twitter deal altogether.

Reduce the price with the problem of water army

Although the margin loan problem has been solved, Musk's acquisition of Twitter has more troubles. While Tesla, Inc. 's share price plummeted, Twitter's share price was also not spared. Musk made a $44 billion offer on April 14, when Twitter's market capitalization was $400, but a month later Twitter's market capitalization had fallen to $30 billion, meaning Musk would pay a premium of $14 billion for Twitter. In other words, the more Twitter shares fall, the more Musk loses.

If Twitter shareholders may have hesitated to accept Musk's offer, with Twitter's share price plummeting, selling it to the world's richest man at the high price Musk promised has become the best choice for Twitter shareholders now. Now the party who is not satisfied with the acquisition contract has become Musk, the former winner of the acquisition. The Twitter board, which launched the poison pill to boycott Mr Musk, has repeatedly stressed that it plans to complete the sale with "agreed prices and executive terms".

Musk obviously doesn't want to be a bad guy. As the share prices of Tesla, Inc. and Twitter continue to plummet, he has used new means of pressure. Since May 13 (Tesla, Inc. 's share price has fallen below the $740 position line), he has been blaring publicly on the Twitter platform: questioning the existence of a water army in Twitter's user data and the true size of fake robot accounts. Twitter is required to prove its real user data, otherwise he will threaten to withdraw from the acquisition.

Fake accounts on Twitter are a problem that Musk has been attacking for the past few years. When Twitter applied to go public in 2013, the risk statement in the prospectus mentioned that, according to an internal sample assessment, false accounts accounted for less than 5% of the platform's monthly active users. For the past nine years, Twitter has claimed that the proportion of fake accounts on its platform is less than 5%.

However, Musk did not dispute this figure when he signed the acquisition agreement, nor did he ask for internal data from Twitter. But the sharp falls in the share prices of both Tesla, Inc. and Twitter mean that the cost of buying Twitter has risen in both directions, and Musk apparently wants to use this as an excuse to raise a fake account at this time. Pressure on Twitter's board to renegotiate the purchase price or even abandon the deal.

But to Musk's disadvantage, when he signed the acquisition contract with Twitter's board of directors at the end of April, perhaps he was so satisfied that he did not ask for due diligence and gave up the right to view Twitter's financial and internal data. Under the acquisition contract, Musk must complete the $44 billion acquisition under the contract unless he proves that the Twitter board is misleading and fraudulent or that a major event affects Twitter's valuation.

Send Twitter CEO a piece of shit.

Although the termination fee set by the acquisition contract is $1 billion, it does not mean that Musk can directly stop the loss and leave by handing over $1 billion. Twitter's board of directors still has the right to sue in Delaware, where it is registered, to force Mr Musk to complete the deal or to seek compensation of more than 15 per cent (more than $6 billion). There is a precedent in Delaware court.

In January 2001, Tyson Foods, the largest chicken supplier in the US, reached an agreement to buy IBP, a beef packaging plant, for $3.2 billion. But just a month later, Tyson asked to cancel the acquisition on the grounds that it found problems in the IBP audit. IBP subsequently filed a lawsuit in a Delaware court, alleging that Tyson Food was informed of the problems when it signed the acquisition agreement and asked the court to force Tyson Food to complete the acquisition.

In the end, the court upheld IBP's claim that the acquisition agreement signed by the two parties was legal and enforceable and ordered Tyson Foods to complete the deal. Tyson Foods was forced to complete the acquisition. More than two decades later, IBP is now the pork and beef subsidiary of Tyson Foods.

For the past few weeks, Musk has been at loggerheads with Twitter's board of directors over fake accounts. On May 17, when Twitter CEO Parag Agrawal said publicly on Twitter that he refused to outside investigate the size of the fake Twitter account, Musk unabashedly replied directly to him as "a piece of shit."

On Monday, Musk again threatened to cancel his $44 billion acquisition of Twitter if Twitter did not give him access to internal data, which amounted to a breach of contract. At the same time, his team of lawyers sent a letter to Twitter's general counsel asking for full access to Twitter's internal data streams. They argue that this is a necessary means to understand the size of the water army and fraudulent accounts on Twitter.

After weeks of stalemate, Twitter's board made another concession on Wednesday and decided to allow Musk's team to take a full look at the original data inside Twitter. Musk's acquisition team could get comprehensive data on Twitter as soon as this week to assess the true number of fake and fraudulent accounts. At present, it is impossible to predict the true size of fake accounts on the Twitter platform, but some external studies predict that the true proportion of fake accounts may exceed 10% or even as high as 15%.

Take the initiative to jump into the political fire pit

Although Twitter is the most influential social media platform in the world, its revenue performance and stock market capitalization are a far cry from those of other social platforms. This reversal of influence and business value has long caused dissatisfaction among Twitter shareholders and put pressure on management and the board of directors. Twitter does not set up super voting rights, and the board's shareholding accounts for less than 2.5% of the vote, leaving the board unable to resist pressure from major shareholders and institutional investors.

However, the value of Twitter cannot be measured by market capitalization and revenue. This is not an ordinary consumer Internet company, but a network platform with huge political energy. In the past few years, both Walt Disney Company and Salesforce.com Inc had serious negotiations to buy Twitter, but both chose to give up. Maybe they are also thinking about the political risks of buying Twitter.

But Musk jumped into this "big pit" on his own initiative. Due to billionaire wealth tax, COVID-19 vaccine and trade union policies and other issues, Musk's relationship with the Democratic Biden administration is unusually cold, and he has repeatedly distanced himself from Warren and other Democratic radical senators. Musk and Tesla, Inc. 's move from deep blue California to crimson Texas is also seen as his public support for Republican policies of light taxation and regulation.

Over the past year, Democratic President Joe Biden has frequently visited Detroit's traditional auto companies to enlist the support of blue-collar workers in the Great Lakes, while showing apparent indifference to Musk. He is even unwilling to invite or mention Tesla, Inc. and Musk (mainly because of Tesla, Inc. 's anti-union stance) at public events in support of the development of electric cars. This deliberate neglect has left Musk, the global leader in electric cars and new energy, snub and grumble.

This time, Musk bought Twitter on the grounds of "safeguarding freedom of speech," openly supported Trump's return, and planned to overturn Twitter's content censorship standards, which is tantamount to placing himself at the forefront of public opinion between the left and right factions of the United States. Chose to take the red side in the American political struggle.

After Tesla, Inc. 's share price plummeted in early May, Musk vented his anger against the Democratic government directly on Twitter, repeatedly attacking Biden for "only reading the teleprompter, bad economic policy, and the US economy could fall into recession." accusing the Democratic Party of becoming a "political party of division and hatred"; this series of public remarks is tantamount to Musk declaring his support for the Republican Party.

On May 20, Musk suddenly hinted that "because of his support for the Republican Party, he will become a political target." The next day, US media revealed that Musk had sexually harassed a female flight attendant on a private plane in 2016, and SpaceX paid a hush fee of $250000. Musk completely denied this, reprimanded the other side for not even saying his own physical features, and accused it of splashing dirty water for political purposes.

The future is still uncertain.

After all the changes over the past two months, Musk has reached an acquisition agreement, but the prospects for the deal have not been settled. After being allowed to view the original data inside Twitter, it remains to be seen what conclusions the Musk team will draw about the size of the fake accounts and whether they will be required to significantly lower the transaction price or simply withdraw from the acquisition agreement.

If time could be set back a month, Mr Musk might persuade himself on April 25th to think carefully before signing the acquisition agreement, or at least complete due diligence. Twitter shareholders are now more likely to press ahead with the deal than Mr Musk, who regrets signing too quickly. Twitter's general counsel said the company is waiting for SEC to approve the proxy document and plans to hold a shareholder vote on the acquisition agreement at the end of July or early August. On June 3, the acquisition passed a period of review and evaluation by U. S. regulators.

Perhaps Musk and the Twitter board will continue to push in the coming month, even without ruling out the possibility of litigation settlement and more shareholder lawsuits. Ajit Pai, former chairman of the Federal Communications Commission (FCC), publicly suggested that Twitter's board of directors resolve their current differences with Musk as soon as possible, or even make concessions.

At the same time, Musk's acquisition of Twitter also faces resistance from leftist social groups. More than a dozen leftist NGO backed by Gates and other billionaires have formed a "Stop The Deal" public opinion campaign, hoping to put pressure on SEC, advertisers and other institutions and block the deal through class action.

The world's richest man personally paid $33 billion to buy the world's most influential social media for a total of $44 billion. The deal not only set a record for leveraged buyouts, but also stirred the sensitive nerves of American society. Musk himself has openly sided with the Republican Party, standing at the forefront of the political struggle between the two parties.

Musk's acquisition of Twitter at an important time:

On January 31, Musk began quietly buying shares in Twitter on the open market.

On March 14, Musk held more than 5% of Twitter. According to the regulations, he is supposed to submit documents to disclose his shareholding within 10 days, but Mr Musk did not disclose it until 21 days later. In the meantime, he has been increasing his stake. This serious violation has triggered investor lawsuits and SEC investigations, and Musk clearly has to pay the price.

On March 24, Musk began to warm up for the acquisition of Twitter. He publicly pressured Twitter to publish its algorithm and questioned that Twitter did not abide by the principle of freedom of expression.

Musk approached two Twitter directors, co-founder Dorsey and Silver Lake CEO Egon Durban, to discuss the future of social media and the possibility of him joining the Twitter board.

Musk met with Twitter Chairman Taylor and CEO Aggarwal twice on March 27 and 31 to discuss his interest in Twitter and whether to join the Twitter board.

On April 4, Musk filed regulatory filings to disclose that he had become Twitter's largest shareholder. Speculation began about his intentions, and Twitter's share price soared 25%.

On April 5, Twitter publicly announced that Musk would be invited to join the board on the condition that his stake not be increased by more than 15%. The invitation is seen as a way for Twitter to defuse the acquisition threat.

On April 10, the same day Musk officially joined the Twitter board, Twitter announced that Musk had turned down the director's invitation. It is beginning to be confirmed that Musk may buy Twitter.

On April 14, Musk made a formal offer to buy Twitter for $44 billion, a 38 per cent premium to the trading day before Mr Musk disclosed his stake in Twitter on April 1st.

On April 15th, Twitter's board of directors launched a poison pill to show its rejection of Musk's acquisition.

On April 21, Musk presented $46.5 billion in financing vouchers, including $13 billion in bank loans, $21 billion in cash financing and $12.5 billion in margin loans for Tesla, Inc. shares.

On April 25th, Twitter's board of directors reached a $44 billion acquisition agreement with Musk.

On April 29th, Musk cashed out $8.5 billion in Tesla, Inc. shares to raise money for the acquisition of Twitter.

On May 4, Musk submitted documents and raised $7 billion from billionaires such as Ellison, Qian an, Red shirt Capital and institutional investors. Tesla, Inc. 's share price fell 8.4 per cent.

Musk told investors on May 6th that he plans to increase Twitter revenue from $5 billion in 2021 to $26.4 billion in 2028. His revenue plans include the introduction of subscription payment and payment services, as well as reducing reliance on advertising revenue.

On May 10, Musk admitted that he would restore former President Trump's account after buying Twitter, saying it was a mistake to block Trump.

Tesla, Inc. 's share price fell 8.3% on may 11th, breaking the Musk margin loan margin line of $740.

On May 13, Musk publicly questioned the proportion of fake Twitter accounts and threatened to suspend acquisitions. Three days later, Musk replied "a piece of shit" to the tweet of CEO Aggarwal.

On May 17, Musk again threatened to suspend the acquisition of Twitter unless he knew the size of the fake Twitter account. He said the proportion of fake Twitter accounts could be as high as 20% and called on SEC to investigate.

On May 18, Musk announced that he supported the Republican Party, accusing the Democratic Party of becoming a party of "division and hatred."

On May 21, the media revealed that Musk sexually harassed flight attendants on a private plane in 2016 and paid $250000 hush fee afterwards. Musk denied the sexual harassment charges, saying it was revenge for political purposes. Tesla, Inc. 's share price fell below $700.

On May 26th, Mr Musk filed regulatory filings to raise the equity financing portion of the $44 billion financing to $33.5 billion and to seek additional financing guarantees, thereby abandoning the use of margin loans in the Twitter deal altogether.

On May 26, Twitter investors filed a class action lawsuit against Musk, alleging that Musk deliberately delayed disclosing that his stake in Twitter reached 5%, continued to increase his stake at a low price, and made real gains from it, deliberately manipulating the stock price.

On June 3, Musk's acquisition of Twitter passed a review period by U. S. regulators. FTC didn't do anything about it, which means Musk can press ahead with his acquisition of Twitter.

On June 3, Mr Musk suddenly sent an internal email saying that Tesla, Inc. needed to lay off 10 per cent of his staff because of his poor economic expectations. Tesla, Inc. 's share price fell 9 per cent again on the same day. He withdrew his remarks a day later, saying that Tesla, Inc. 's total number of employees would continue to increase and there would be no change in the number of employees.

On June 6, Musk again threatened to cancel his acquisition of Twitter. His team of lawyers sent a letter to Twitter's general counsel asking for authorization to authorize Musk's team to review Twitter's internal data to determine the size of fake accounts. On the same day, the Republican attorney general of Texas announced an investigation into false Twitter accounts.

On June 8th, the Twitter board agreed to allow Musk a full view of internal information data.