Explained: Elon Musk is taking Twitter private, what this means for the company, employees and shareholders - Times of India (2024)

Twitter is now an

Elon Musk

company and the billionaire, who also owns other companies, is going to take the micro-blogging website private. With the takeover now completed, Elon

Musk

is poised to take some steps to ensure that the platform is "a common digital town square" where "beliefs can be debated in a healthy manner without resorting violence" and it does not become a "free-for-all hellscape."
In this article, we explain what could happen to Twitter and the employees as it is now owned by Musk.

Difference between public and private company
A public company, or publicly listed company, has a lot of shareholders. Any person can buy shares of public companies and the shares trade on stock exchanges. A private company is closely held and has a few or one shareholder. The shares don’t trade on exchanges so you can’t buy them unless someone wants to legally sell them to you.
With Musk ending up splashing $44 billion on acquisition of Twitter, he will now start delisting the company’s stock and taking it out of the hands of public shareholders in line with the process of taking the social media platform private.
Twitter went public in 2013, the same year, another public company, Dell, went private. A report says the

Tesla

CEO sought advice from

Michael Dell

, the founder, chairman, and CEO of Dell Technologies, to take the company private.

What is means to Elon Musk
With Twitter going private, Musk will have full authority of making, removing or tweaking rules as per his liking. He will not have to make quarterly public disclosures about their performance and Twitter will also be subjected to less regulatory scrutiny.
At many occasions, Musk has been vocal about making the platform public space where people from all quarters of the society can are welcome. He has criticised Twitter’s move to ban accounts, such as that of former US President Donald Trump. The ownership of the social media platform will enable him to realise his goal.
The Tesla CEO, in fact, highlighted this in his address to advertisers earlier this month. Musk said he wants to make Twitter a common digital public square where people could freely discuss and debate ideas without “resorting to violence.”
He, however, said that free speech on the platform will not be tolerated. He said in the post that Twitter would not become a “free-for-all hellscape” and announced that there "will be a content moderation council with widely diverse viewpoints and there will be no major content decisions or account reinstatements will happen before that council convenes."
Musk also wants to sent advertisers a message that "Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise.”
Soon after his takeover, the platform was reportedly flooded with racial slurs and saw a 500% rise in use of N-word. The company came out and explained that it was a "trolling campaign" involving "inauthentic" accounts.
How is Musk taking Twitter private
Musk established

X Holdings

in Delaware to handle the deal. The corporate entity is merging with the social media company and is buying out all of Twitter’s stock. Musk will be at the helm of the company.
As per a report in New York Times, Twitter’s shareholders approved the company’s sale in September and agreed to sell their stock to him for the offered $54.20 a share. They can get the cash value of their shares. As mentioned, Twitter will be delisted from the

New York Stock Exchange

and its shares will no longer trade on public markets as of November 8.

Why did the acquisition take so much time
Musk announced that he will buy the company for $44 billion. Soon after, Musk said that Twitter had failed to accurately report the number of spam accounts. At that time, then CEO

Parag Agrawal

tried to explain the number of bots on Twitter.
However, Musk later said that he was no longer interested in buying Twitter. Reportedly, the microblogging website then accused Musk of trying to back out of the deal because of a hit on his wealth.
What happens to Twitter board
The current board of directors at Twitter is likely to be dissolved and Musk is expected to make a new board for operations. Reports suggest Musk has already ‘fired’ CEO Parag Agrawal,

Vijaya Gadde

, top legal and policy executive,

Ned Segal

, Twitter’s chief financial officer and Sean Edgett, the general counsel. Musk and Agrawal clashed publicly and privately earlier this year.
The New York Times reports that Agrawal may receive $60 million, Segal $46 million and Gadde $20 million.
What happens to employees
Reports suggest that Musk is looking to trim the staff and he could fire up to 75% of Twitter staffers. Twitter has about 7,500 employees globally. With the company going private, the employees will be given cash bonuses.
Repaying of debt
Musk has borrowed a lot of money to purchase Twitter. Banks lent him $12.5 billion and equity investors provided about $7.1 billion for the deal. Musk will have a herculean task of repaying these debts. He may sell branches/ services of the company to pay debts.