Twitter’s (TWTR) board has accepted Elon Musk’s cash offer of $54.20 per share to buy the company and take it private.
The $44 billion deal, announced on April 25, is expected to close later in 2022.
“Twitter has a purpose and importance that affects the whole world. Deeply proud of our teams and inspired by work that has never been more important,” said Twitter CEO Parag Agrawal.
“I hope even my worst critics stay on Twitter, because that’s what free speech is all about,” Musk wrote on Twitter.
I hope even my worst critics stay on Twitter, because that’s what free speech is all about
— Elon Musk (@elonmusk) April 25, 2022
The deal caps a month of dramatic headlines and tweets. It began on March 25, with Musk accusing the company of failing to “live up to the principles of free speech” in a way that “fundamentally undermines democracy.”
Within days, Musk revealed a passive 9.2% stake in the social media powerhouse. Within a month, he was appointed to run the company.
What does the future hold for Twitter? That’s anyone’s guess.
The great adventure of Elon Musk
From the start, Musk’s bid for Twitter seemed like a loophole. But what began as a series of quixotic tweets about free speech quickly evolved into a serious takeover bid, backed by the largest buyout financing package ever raised by one person.
Musk raised $46.5 billion to finance his takeover of Twitter, with his own assets backing two-thirds of that amount. Musk’s share includes a giant $12.5 billion loan secured by his equity stake in Tesla Inc. (TSLA). The remainder comes from bank financing secured by Twitter’s own assets, a classic leveraged buyout deal.
Concerns about the level of risk taken in the deal were dismissed. Musk commented that he “didn’t care at all” about the economics of the deal and that he was following Twitter because it was “extremely important to the future of civilization.”
A takeover offer or a stoner joke?
Twitter’s stock wasn’t just $40 in April, and reached around $53 a share as Musk piled up his stock and played with Twitter’s board. The stock never got as high as Musk’s $54.20 offer, as investors and market watchers reacted with incredulity to his overall approach to the deal.
Some wondered if Tesla’s technology was true to Twitter’s pursuit or if its interest would lapse once it faced the challenges of striking a deal.
We recall that in August 2018, Musk tweeted that he had “secured financing” to take Tesla private, at $420 per share. A year of drama ensued as Musk fended off SEC litigation and harsh criticism for his cavalier stance — starting with criticism of a deal price that was based on a joke of 420 rubles.
The offer for Twitter drew similar reactions at first.
For its part, Twitter approved a “poison pill,” or an emergency that would have started if Musk had increased his stake to 15% or more. Existing shareholders would have been offered the opportunity to buy many more TWTR shares at deep discounts, rapidly diluting Musk’s stock—not to mention Twitter’s stock price.
The current deal means the pill has been taken off the table. But for a second there, Musk’s big Twitter adventure was facing stiff resistance from the company’s board.
What Musk means for Twitter
To paraphrase the old TV commercial, Elon wasn’t so impressed with Twitter that he bought the company.
Musk has more than 83 million followers on the platform and remains a prolific tweeter. He has tweeted his enthusiasm for Dogecoin, insulted his perceived enemies, shared memes and engaged in culture war commentary – all while mixing in breaking news and enthusiastic updates about his various business ventures. , from Tesla to SpaceX to the boring company.
When it comes to Twitter itself, Musk has stated that he wants to “make Twitter better than ever by improving the product with new features, making the algorithms open source to increase trust, defeating spam bots and validating all humans”.
Musk is hardly the first ultra-rich entrepreneur to try to use wealth to influence the media. Jeff Bezos bought the Washington Post, Marc Andreessen founded Clubhouse, and Peter Thiel deliberately shut down Gawker.com.
But Twitter feels differently about these efforts, given the huge role the platform plays in the information ecosystem in the US and around the world right now.
