Twitter’s board has agreed to sell the company for about $ 44 billion to Elon Musk, a deal that will result in the world’s richest man taking control of the influential social media platform.
Musk announced the deal, saying “freedom of speech is the foundation of a functioning democracy” and described the social media platform as “the digital urban square where issues crucial to humanity’s future are discussed”.
Musk’s takeover of Twitter could turn Tesla’s CEO, who has used the platform to attack regulators and critics, into a new-age media baron as millions of people trust the San Francisco-based news platform.
Shareholders of the platform will receive $ 54.20 in cash for each share of Twitter’s ordinary shares upon completion of the transaction. The purchase price represents a premium of 38 percent compared to the company’s closing price on April 1, the day before Musk revealed that he had built up a 9 percent ownership stake in the company.
Musk said he wanted to make Twitter “better than ever” by introducing new features, making its algorithms open source, stamping bots and authenticating “all people”.
“Twitter has enormous potential – I look forward to working with the company and the user community to unlock it,” he added.
The deal covers a series of unexpected moves from Musk that have overtaken Wall Street and Silicon Valley. Within three weeks, Musk became one of the company’s largest shareholders and was offered a board seat, which he declined. He then launched an unsolicited bid for the company on April 14 at $ 54.20 per share. stock – broadly interpreted as a reference to marijuana culture.
Twitter initially sought to hamper Musk’s progress by implementing a poison pill aimed at limiting his ability to acquire a significant stake. But the board was forced to the negotiating table over the weekend after it unveiled a $ 46.5 billion financing package for the deal.
The company’s executives also received calls from some of its major shareholders, including active and passive investors, who pushed for them to accept the offer, people who were briefed on the talks said. Investors had little confidence that the stock price would rise significantly higher than Musk’s short-term offerings.
If the deal goes through, it will be one of the largest leveraged buyouts ever – a feat that few on Wall Street thought was possible given the size of the transaction. The deal is expected to close this year, subject to regulatory and shareholder approvals, the company said.
“Twitter’s board conducted a thoughtful and comprehensive process to evaluate Elon’s proposal with a conscious focus on value, security and financing,” said Bret Taylor, Twitter chairman.
He added: “The proposed transaction will provide a significant cash premium and we believe it is the best way forward for Twitter shareholders.”
Musk has raised $ 25.5 billion. in debt – including a $ 12.5 billion margin loan against its shares in Tesla – from a group of banks led by Morgan Stanley, his financial adviser. He has also committed to provide $ 21 billion in equity financing for the takeover, leaving him on the hook for more than 70 percent of the purchase price unless he finds other backers.
The trade may still fall apart if it is blocked by regulators or if Musk does not deliver on the stock component of the transaction. He is in talks with a number of wealthy individuals and institutional investors to support that part of his bid, people informed about the negotiations.
Musk is legally obliged to raise the funds for the trade. A break fee is also in place, although its terms will not be known until the merger agreement is filed with the securities regulators.
In his offer to Twitter, Musk outlined plans to loosen the social media platform’s policies for content moderation, describing himself as an “absolute freedom of speech”.
Republicans are hoping 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 seemed to rule out a return to the platform, telling Fox News on Monday that he would communicate via his own social media project, Truth Social.
The deal will result in another period of turbulence for Twitter employees, who recently replaced its CEO, co-founder Jack Dorsey, with longtime engineer Parag Agrawal.
Dorsey went out in favor of the deal, tweeting that Twitter was “the closest we have to a global consciousness”, but that it was “owned by Wall Street and the ad model [and] taking it back from Wall Street is the right first step ”. Musk has hinted at plans to move Twitter away from relying heavily on digital advertising.
“I trust his mission to expand the light of consciousness,” Dorsey said of Musk.
Twitter rushed to reassure advertising agencies in the wake of the announcement of the deal, telling them to expect business as usual and stressing their commitment to their existing product roadmap, according to screenshots of emails seen by the Financial Times.
Musk has already worried some employees after he made the move to close the company’s headquarters in San Francisco, while making a number of other controversial proposals, such as paying board members a salary of $ 0.
Agrawal wrote on Twitter on Monday: “Twitter has a purpose and a relevance that affects the whole world. Deeply proud of our teams and inspired by the work that has never been more important.”