Elon Musk speaks at the World Car News Congress at the Renaissance Center in Detroit, Michigan, January 13, 2015. REUTERS / Rebecca Cook
Register now for FREE unlimited access to Reuters.com
I’m registering
April 14 (Reuters) – Elon Musk took to Twitter (TWTR.N) with a $ 41 billion cash offer on Thursday, with Tesla’s CEO and billionaire entrepreneur saying the social media giant should be private. to grow and become a platform for free speech.
“Twitter has tremendous potential. I will unlock it, “Musk, now the company’s second-largest shareholder, said in a letter to Twitter on Wednesday. The offer was made public in regulatory documents on Thursday.
Musk’s offer price of $ 54.20 per share is a 38% premium from the closure of Twitter on April 1, the last trading day before its 9.1% stake in the social media platform was made public.
Register now for FREE unlimited access to Reuters.com
I’m registering
Musk turned down an invitation to join the Twitter board this week after revealing his stake, a move that analysts say signaled his intentions to take over, as a seat on the board would limit his stake to just under 15 percent. Read more
He told Twitter that this was his best and latest offer and said he would reconsider his investment if the board rejected it.
“Since I made my investment, I now realize that the company will neither thrive nor serve this social imperative in its current form. Twitter needs to be transformed as a private company, “Musk said in a letter to Twitter chairman Brett Taylor.
Musk, who calls himself an absolutist of free speech, criticized the social media platform and its policies and recently conducted a poll on Twitter asking users if they believe it adheres to the principle of free speech.
Twitter will review the offer with advice from Goldman Sachs and Wilson Sonsini Goodrich & Rosati, a source told Reuters.
Shares on Twitter rose about 5% in pre-market trading to $ 48.30 in New York, where they were most actively traded, while shares of Tesla fell by about 2%. Based on Wednesday’s closing price of $ 45.85, Twitter’s stock price response suggested Musk had a 29% chance of making a deal.
The total value of the deal of $ 41 billion is estimated on the basis of 763.58 million shares outstanding, according to Refinitiv.
Musk said US investment bank Morgan Stanley acted as financial adviser on his proposal. However, he did not say how he would finance the deal if it took place.
“We believe that Musk could seek to finance the deal if it is approved, through a combination of debt financing and potential Tesla shares. Given the size of the deal (about $ 43 billion), we believe some Tesla shares may be sold. much of his wealth is associated with the company, “said CFRA Research analyst Angelo Zino.
Musk, the world’s richest man, according to Forbes estimates, sold more than $ 15 billion worth of shares in Tesla, about 10 percent of his stake in the electric vehicle maker, late last year to settle a tax.
“SERIAL FAILURE”
The lower-than-expected Twitter add-ons in recent months have raised doubts about its growth prospects, even as it pursues major projects such as audio chat rooms and newsletters.
“The big question for the Twitter board now is whether to accept a very generous offer for a business that has been underperforming and tends to treat its customers with indifference,” said Michael Huson, chief market analyst at CMC Markets. , after the message. from Musk’s proposal.
Musk has amassed more than 80 million followers since joining Twitter in 2009, and has used it to make several statements, including irritating a private deal for Tesla that put him in hot water with regulators.
He was also sued by former Twitter shareholders who say they missed the recent increase in his share price because he waited too long to reveal his stake. Read more
“If he really wants to make Twitter private, his previous clashes with regulators may not be an obstacle – but it could make potential funding sources afraid to provide the money for the deal – unless he’s willing to bet much of his Tesla Debt Holdings, ”Howard Fisher, a partner at Moses & Singer and a former senior legal adviser to the U.S. Securities and Exchange Commission (SEC).
Musk’s move also raises the question of whether other Twitter candidates may emerge, although the initial reaction to the stock price does not suggest that this is widely expected.
“It would be difficult to get other bidders / consortium and the Twitter board will probably be forced to accept this offer and / or start an active process of selling on Twitter,” Wedbush Securities analyst Daniel Ives wrote in a client note.
“There will be many questions about the financing, regulation, balancing of Musk’s time (Tesla, SpaceX) in the coming days, but ultimately based on this submission, Twitter will accept an offer now or never,” Ives said.
Register now for FREE unlimited access to Reuters.com
I’m registering
Report by Xavi Mehta and Uday Sampat in Bengaluru; Greg Romeliotis in New York and Chris Prentiss in Washington, DC; Writing by Anna Driver; Edited by Anil D’Silva and Alexander Smith
Our standards: Thomson Reuters’ principles of trust.
Add Comment