Five weeks into Elon Musk’s Twitter takeover and the deal has yet to reach a decisive conclusion. So far, this is how things are progressing – this week, Musk’s $44 billion offer remains ‘On Hold’ due to questions over the accuracy of Twitter’s claim that 5% of its total users are fake. During this time, Twitter itself had to face numerous internal conflicts connected to Musk’s bid.
During the course of Musk’s takeover, Twitter had already lost several top executives, as well as Jack Dorsey exiting the company entirely as a means of letting it enter a new era under new leadership. Now, Twitter faces a battle with its board members, with Silver Lake Partners’ Egon Durban resigning from the board after shareholders blocked his reelection.
Legally Speaking…
Durban was granted the position in 2020, following the push by Elliott Management Group to buy up Twitter shares, forcing then-CEO Jack Dorsey to step down from his position. Elliott thought Dorsey underperformed, opting to partner instead with Silver Lake, further pressuring the company to either improve its bottom line or accept a change in management.
To add to his work with Twitter and various other companies, Durban has also been a longtime ally of Musk, who this week was denied reelection by Twitter shareholders as a form of protest from Twitter investors. Regarding anything Elon and Twitter-related, it’s all but simple – Twitter itself has refused to accept Durban’s resignation. In a statement to the SEC, Twitter explained that Durban’s reelection was likely rejected by shareholders due to him also serving on the board of six other publicly traded companies. Durban has vowed to step back from these other commitments, which is enough for Twitter to keep him on its team.
“While the Board does not believe that Mr. Durban’s other public company directorships will become an impediment if such engagements were to continue, Mr. Durban’s commitment to reduce his board service commitment to five public company boards by the Remediation Date appropriately addresses the concerns raised by stockholders with regard to such engagements. Accordingly, the Board has reached the determination that accepting Mr. Durban’s Tendered Resignation at this time is not in the best interests of the Company.”
It’s hard to say why Twitter would want to keep Durban, especially with Musk looking to eliminate Twitter’s board if/when he becomes the new owner. There’s another key reason for maintaining this already-rickety link between Musk and Twitter’s board – Twitter shareholders are mulling a class-action lawsuit against Musk over his takeover, based on the allegation that Musk has ‘violated’ California corporate laws on several fronts, touting his acquisition of Twitter as a form of market manipulation.
“In one potential violation, they claim that Musk financially benefited by delaying required disclosures about his stake in Twitter and by temporarily concealing his plan in early April to become a board member at the social network. Musk also snapped up shares in Twitter, the complaint says, while he knew insider information about the company based on private conversations with board members and executives, including former CEO Jack Dorsey, a longtime friend of Musk’s, and Silver Lake co-CEO Egon Durban, a Twitter board member whose firm had previously invested in SolarCity before Tesla acquired it.”
Perhaps this is the reason why Twitter wants to keep Durban in-house – his past dealings with Musk could help ease the deal through or assist shareholders with their action. Either way, regardless of the impact that Durban’s presence brings to this already messy deal, Musk has repeatedly stated that he will not pay for the company unless it can convince him that the data on its fake profiles is accurate. So, there’s still a possibility that this deal won’t happen. Other complications include the SEC now investigating Musk’s conduct leading up to his Twitter takeover push.
The Wrap
Circumventing the otherwise conspiracy-like details, various analysts have suggested that Musk is looking for a way out of the acquisition, while the overall sentiment is that he’ll eventually have to pay up. Though unclear why, after going through such lengths already, Musk seems to be trying to wriggle his way out, which would only be disastrous for Twitter.
A lot going on. Investors are unhappy with Musk, especially since his various comments have tanked Twitter’s stocks. His walking away would leave Twitter in a lesser state, while also giving off the idea that it’s not a worthy investment. Others say that that might be his plan to save millions on the deal; to harm the company so much that its stocks plummet. Bottom line? It’s all an ugly mess, which leads many of us to question just what kind of era would one under Elon Musk’s rule be?
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