Twitter Inc. was merged with a new shell company called X Corp. is no longer an independent entity, leading to speculation about Elon Musk’s plans for the social media platform.
According to an April 4, document submitted to a California court in support of a lawsuit against the company and Jack Dorsey (its former chief executive officer), Twitter “no more exists” following its merger with X Corp. conservative activist Laura Loomer last year.
Twitter’s future is unclear. The company was bought by Musk for $44 billion in 2013. Musk tweeted Tuesday about the change with one character, “X”
The second-richest man in the world has stated his desire to create X like China’s WeChat. Tencent Holdings Ltd. owns the super-app and it can be used for everything, from booking tickets to payments to messaging. He’s not clear on how it will fit into his vast business empire that includes the electric car giant Tesla Inc. and the Space Exploration Technologies Corp. Musk. The domain “X.com”, which is the name of the online payment company he founded, which he eventually merged with PayPal.
In April 2013, Musk set up a trio holding companies in Delaware under a variant of “X Holdings”, as part of his Twitter takeover bid. According to state records, X Corp. was founded in Nevada on March 9, according to the company’s records. The merger with Twitter was filed on March 15. Musk is the president of the firm, along with its parent, X Holdings Corp. which was also created last week and has an authorized capital amount of $2 million according to filings. These changes were reported for the first time by Slate.
Ann Lipton, Tulane University associate dean of law school, stated that “it is well understood in the corporate industry that incorporating in Nevada will allow you to have fewer fiduciary duties.” It’s easier to sue Nevada directors and officers for breaching fiduciary obligations if investors are involved. Twitter was established in Delaware and Musk’s fight over the acquisition took place in its chancery Court.
Bloomberg News sent questions to Twitter asking for information. Twitter no longer has a media query team. Willkie Farr and Gallagher, the lawyers representing Twitter in this case, did not respond immediately to a request for comment.
Musk stated during a Twitter Spaces interview with BBC late Tuesday in San Francisco that he had plans to create the new holding company X. He also reiterated that Twitter was an “accelerator” towards his vision of an all-app app. He declined to give details, saying that observers would have to “stay tuned” to learn more.
Musk’s tweet attracted more than 13,000,000 views in less than 24 hours. Japan saw the topic “Twitter Gone” become a popular topic. Users joked that Twitter’s new name would be similar to that of X Japan, a local rock band.
Mandeep Singh, an analyst at Bloomberg Intelligence, said that Musk could create a parent structure similar to Alphabet where all his companies are located. I don’t think he could layer ecommerce or payments on Twitter when his larger peers, such as Meta, have struggled to be an all-purpose app for consumers.