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Twitter’s (TWTR) board of directors has accepted Elon Musk’s $54.20 per share cash offer to acquire the company and take it private.
The $44 billion deal, announced on April 25, is expected to close later in 2022.
“Twitter has purpose and relevance that impacts the world. Deeply proud of our teams and inspired by the work that has never been more important,” said Parag Agrawal, CEO of Twitter.
“I hope even my worst critics stay on Twitter because that’s what free speech means,” Musk tweeted.
I hope even my worst critics stay on Twitter, because that’s what free speech means.
— Elon Musk (@elonmusk) April 25, 2022
The deal ends a month of dramatic headlines and tweets. It all started on March 25, with Musk accusing the company of not “adhering to the principles of free speech” in a way that “fundamentally undermines democracy.”
Within days, Musk disclosed a 9.2% passive stake in the social media powerhouse. Within a month, he was in charge of running the business.
What future for Twitter? It’s everyone’s guess.
Elon Musk’s Great Adventure
From the start, Musk’s offer for Twitter sounded like a lark. But what started as a series of chimerical tweets about free speech quickly turned into a serious leveraged buyout offer, backed by the biggest package of acquisition financing ever raised by one person. .
Musk raised $46.5 billion to fund his takeover of Twitter, with his own assets backing two-thirds of that amount. Musk’s share includes a giant $12.5 billion margin loan secured by his stake in Tesla Inc. (TSLA). The rest comes from bank financing secured by Twitter’s own assets, a classic leveraged buyout arrangement.
Concerns about the level of risk assumed in the deal were dismissed out of hand. Musk commented that he “didn’t care ‘at all’ about the economics of the deal” and was suing Twitter because it was “extremely important to the future of civilization.”
An acquisition offer or a Stoner joke?
Twitter shares were just below $40 in April and rose to around $53 per share as Musk racked up his stake and toyed with Twitter’s board. Shares never rose to Musk’s $54.20 bid as investors and market watchers reacted in disbelief to his overall approach to the deal.
Some have wondered if the technology of Tesla was sincere in pursuing Twitter or whether his interest would die out once he grappled with the challenges of reaching an agreement.
Recall that in August 2018, Musk tweeted that he had “secure financing” to take Tesla private, at $420 per share. A year of drama followed as Musk fended off SEC litigation and fierce criticism for his cavalier attitude, starting with criticism of a sale price based on a 420 stoner joke.
Twitter’s offer initially drew similar reactions.
For its part, Twitter adopted a “poison pill,” or contingency that would have been triggered if Musk had increased his stake to 15% or more. Existing shareholders would have had the option to buy many more shares of TWTR at deep discounts, quickly diluting Musk’s stake, not to mention Twitter’s share price.
The current deal means the pill has been taken off the table. But for a second, Musk’s big Twitter venture was met with stiff resistance from the company’s board.
What Musk means for Twitter
To paraphrase the old tv commercialElon was so impressed with Twitter that he bought the company.
Musk has over 83 million followers on the platform, and he remains a prolific tweeter. He tweeted his enthusiasm for Dogecoin, insulted his perceived enemies, shared memes and engaged in culture war comments, all while mixing in breaking news and enthusiastic updates on his various business ventures, from Tesla to SpaceX to the Boring Company.
As for Twitter himself, Musk said he wanted to “make Twitter better than ever by improving the product with new features, making algorithms open source to increase trust, defeating spambots and authenticating all humans”.
Musk is not the first ultra-wealthy entrepreneur to try to leverage 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 different from those efforts, given the platform’s outsized role in the news ecosystem in the United States and around the world today.