Twitter has ceased to be an independent company after merging with a newly formed shell firm called X Corp, driving speculation about what Elon Musk intends for the social media platform.
Twitter “no longer exists” after being merged with X Corp, according to a document from April 4th, submitted in a California court for a lawsuit filed against the company and its former chief executive, Jack Dorsey, last year by conservative activist, Laura Loomer.
It’s unclear what the change means for Twitter, which has seen a sweeping overhaul since Musk bought the company last year. The billionaire owner has, in the past, suggested that buying Twitter would be an “accelerant” for creating X – which he dubbed an “everything app”. Musk tweeted about the move on Tuesday, writing the single character “X”.
The world’s second-richest man has professed his desire to make X similar to China’s WeChat, a super-app used for everything from payments and booking event tickets to messaging. He has, however, been vague about how it will fit in with his sprawling business empire, ranging from the electric car giant Tesla to SpaceX. Musk also owns the domain “X.com” – the name of the online payments company he started and eventually merged with PayPal.
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Musk first set up a trio of holding companies in Delaware with a variation of the name “X Holdings” in April last year as part of his takeover bid for Twitter. X Corp, however, was set up on March 9th in Nevada and its merger with Twitter was submitted on March 15th, according to records filed in the state. Musk is president of the firm and its parent is X Holdings Corp, which was also set up last month and has an authorised capital of $2 million, filings show.
Twitter, which no longer has a team handling media queries, did not immediately comment.
The change comes as Twitter’s former chief executive revealed the US Justice Department and the US Securities and Exchange Commission investigated the social media platform in the past as part of his effort to force the company to cover legal fees related to lawsuits and government probes.
Parag Agrawal, ousted last year by new owner Elon Musk, and other former executives said in a Delaware Chancery Court lawsuit Monday that they’ve spent more than $1 million on lawyers in connection with the probes and shareholder lawsuits over their management of the firm.
Mr Agrawal said in the complaint his lawyer was contacted by representatives of the Justice Department late in 2022 “regarding certain investigations related to the company”. He didn’t elaborate. The New York Times had reported on the lawsuit earlier.
Mr Musk had been contacted earlier in 2022 by the SEC and the Federal Trade Commission over his initial disclosure of acquiring a major stake in Twitter. The billionaire’s lawyers sought to limit disclosures of the contacts with the government, citing confidentiality rules around communications with attorneys.
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Twitter’s former managers claim in their suit that their lawyers have sent repeated letters to Twitter’s attorneys outlining the legal expenses they’ve racked up but the company is violating its own bylaws by “refusing to advance” money to cover their expenses, according to the 20-page complaint filed Monday.
“There can be no legitimate dispute that my clients are involved in these proceedings by reason of the fact each was an officer of the company and, therefore, the company is obligated to advance the expenses we have submitted,” Dave Anderson, a lawyer for the ex-Twitter managers, said in a March 23rd letter to the platform’s attorneys.
Representatives of San Francisco-based Twitter didn’t respond to an email seeking comment on the suit. Other executives demanding Twitter advance legal fees include Vijaya Gadde, its former top lawyer, and Ned Segal, Twitter’ onetime chief financial officer.
Twitter is facing several investor suits over the fallout from Musk’s purchase of the platform for $44 billion last year after his failed effort to get out of the deal. Its also facing suits by other former Twitter employees who claim they were wrongfully denied promised stock grants after getting laid off.
Over the last year, Mr Musk has launched a massive cost-cutting effort at Twitter, laying off thousands of workers and refusing to pay leases negotiated by former managers. The billionaire faces more than $1.5 billion in debt payments this year over the acquisition as advertising revenue has plummeted. – Bloomberg
