The Twitter board has accepted an offer of approximately $ 44 billion to sell the company to Elon Musk, which will lead to the richest man in the world taking control of the influential social media platform.
Announcing the deal, Musk said “freedom of speech is the foundation of a functioning democracy” and described the social media platform as a “digital city square where issues vital to the future of humanity” are discussed.
Musk’s takeover of Twitter could turn Tesla’s chief executive, who uses the platform to attack regulators and critics, into a new-age media baron, with millions relying on the San Francisco-based news platform.
Shareholders of the platform will receive $ 54.20 in cash for each share of ordinary Twitter shares they hold at the close of the transaction. The purchase price represents a 38% surcharge on the closing price of the company on April 1, the day before Musk revealed that he had built a 9% stake in the company.
Musk said he wanted to make Twitter “better than ever” by introducing new features, making its algorithms open source, removing bots and verifying “everyone.”
“Twitter has great potential – I look forward to working with the company and the user community to unlock it,” he added.
The deal limits a series of unexpected moves by Musk that have taken over Wall Street and Silicon Valley. For three weeks, Musk became one of the company’s largest shareholders, was nominated and then turned down a seat on the board. He then made an unsolicited offer for the company on April 14 at $ 54.20 per share – widely interpreted as a reference to marijuana culture.
Twitter has tried to thwart Musk’s progress by administering a poison pill designed to limit his ability to gain significant stake. But the board was forced to sit at the negotiating table over the weekend after it revealed a $ 46.5 billion financial package for the deal.
The company’s directors have also received calls from some of its largest shareholders, including active and passive investors, who are urging them to accept the offer, people familiar with the talks said. Investors had little confidence that the stock price would rise significantly higher than Musk’s offer in the near future.
If completed, the deal will be one of the biggest leverage buyouts in history – a feat few Wall Street has considered possible given the size of the deal. The deal is expected to close this year, subject to approval by regulators and shareholders, the company said.
“Twitter’s board of directors has conducted a thoughtful and comprehensive process to evaluate Elon’s proposal with a deliberate focus on value, security and funding,” said Brett Taylor, Twitter’s chairman.
He added: “The proposed transaction will provide a significant cash bonus and we believe this is the best way forward for Twitter shareholders.
Musk has raised $ 25.5 billion in debt – including a $ 12.5 billion margin loan against his shares in Tesla – from a group of banks led by Morgan Stanley, his financial adviser. It has also pledged $ 21 billion in capital funding for the takeover, leaving it on the hook for more than 70 percent of the purchase price unless it finds other supporters.
The deal could still fall apart if it is blocked by regulators or if Musk fails to execute the share component of the deal. He is in talks with a number of wealthy people and institutional investors to support this part of his offer, people familiar with the talks said.
People added that Musk had agreed to pay an undisclosed fee if the deal fell through.
Presenting his proposal for Twitter, Musk outlined plans to loosen policies to moderate the content of the social media platform, describing himself as an “absolutist of freedom of speech.”
Republicans hope the deal could pave the way for Donald Trump to return to the platform after the former president was banned from repeatedly violating his rules on hate speech and misinformation.
However, Trump appears to be ruling out a return to the platform, telling Fox News on Monday that he would communicate through his own social media venture, Truth Social.
The deal will lead to a new period of turbulence for Twitter employees, who recently replaced their CEO, co-founder Jack Dorsey, with longtime engineer Parag Agraval.
Musk has already worried some officials after pointing out the possibility of closing the company’s headquarters in San Francisco, while making a series of other controversial proposals, such as paying board members a $ 0 salary.
Agrawal wrote on Twitter on Monday: “Twitter has a purpose and relevance that affects the whole world. Deeply proud of our teams and inspired by work that has never been more important. ”
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