Mr. Musk, who was attempting to take Tesla, his electric car company, private, questioned Mr. Dell about the process and the best lawyers to use for the complicated transaction.
Mr. Musk, who did not take Tesla private, is now doing so with Twitter. He is delisting the company’s stock and removing it from the hands of public shareholders as part of his $44 billion acquisition of the social media service, which closed on Thursday.
Making Twitter a private company provides Mr. Musk with some benefits. Privately held companies, unlike publicly traded companies, are not required to make quarterly public disclosures about their performance. They are also less regulated and can be more tightly controlled by an owner. That means Mr. Musk can take over Twitter, including changing the platform’s content rules, finances, and priorities, without having to worry about investors’ concerns.
Mr. Musk is merging Twitter with X Holdings, a corporate entity he established in Delaware to handle the transaction, as part of his acquisition of Twitter. Mr. Musk will control the holding company and will buy out all of Twitter’s stock.
According to a securities filing, Twitter will be delisted from the New York Stock Exchange and its shares will no longer trade on public markets as of Nov. 8. In September, Twitter’s shareholders approved the company’s sale to Mr. Musk and agreed to sell their stock to him for $54.20 a share. Investors will be able to claim the cash value of their shares.
Following the completion of the transaction, Twitter’s board of directors will be dissolved, and its nine members will no longer preside over the company’s operations. Mr. Musk will almost certainly appoint a new board of directors comprised of friends and investors who helped fund the acquisition. The new board will be in charge of charting Twitter’s course as a private company.
Among those let go is Twitter CEO Parag Agrawal, who has clashed with Mr. Musk both publicly and privately. When Mr. Musk complained earlier this year that Twitter had an unchecked spam problem, Mr. Agrawal responded via Twitter. Musk replied with a poop emoji.
According to the merger agreement, Mr. Agrawal could receive a golden parachute worth approximately $60 million, Mr. Segal could receive $46 million, and Ms. Gadde could receive approximately $20 million. It was unclear whether Mr. Musk intended to make the payments.
Twitter employs approximately 7,500 people. For months, some of them have been concerned about the company’s sale to Mr. Musk. As their new owner takes over, many may face layoffs or job changes.
Their pay is also expected to change. Employees are usually given stock options in the company. However, with the delisting of Twitter’s stock, employees will be paid in cash for shares they already own, rather than the stock options they were supposed to receive, according to the merger agreement. Some employees are concerned that Mr. Musk will not uphold his end of the bargain.
Twitter will avoid some public scrutiny by going private because it will no longer be required to make quarterly disclosures about the health of its business. This gives Mr. Musk some leeway as he changes Twitter.
However, the banks that lent him $12.5 billion for the deal will put pressure on him to start repaying his debt. The cost of repaying those loans could run as high as $1 billion a year, financial analysts said.
Mr. Musk also received approximately $7.1 billion from equity investors to complete the transaction. He may also face pressure from those investors, who may expect him to re-list Twitter at some point in order to recoup their investment.
In some take-private transactions, owners have chosen to sell branches of their businesses in order to pay their debts. Mr. Musk could do the same with Twitter.