Twitter accepts takeover bid from Elon Musk
Tesla boss says free speech is 'the foundation' of 'democracy' as board proclaims deal 'best way forward'
Twitter's board of directors has agreed to sell the company to Elon Musk for around $44 billion. With that, the richest man in the world would take control of the influential social media platform.
Announcing the deal, Musk said that "freedom of expression is the bedrock of a functioning democracy" and described the social media platform as the "digital marketplace where the issues important to the future of humanity are discussed".
Musk's takeover of Twitter could transform the Tesla boss, who has used the platform to attack regulators and critics, into a new-age media baron as millions of people use the San Francisco-based platform for news.
Platform shareholders will receive $54.20 in cash for each Twitter common share upon closing of the transaction. The purchase price represents a 38 percent premium to the company's closing price on April 1, the day before Musk announced that he had built a 9 percent stake in the company.
Musk said he wants to make Twitter "better than ever" by introducing new features, open-sourcing its algorithms, eradicating bots and authenticating "all people."
"Twitter has tremendous potential - I look forward to working with the company and the user community to unlock that potential," he added.
The deal marks the end of a series of unexpected moves by Musk that are sending Wall Street and Silicon Valley into turmoil. Within three weeks, Musk became one of the company's largest shareholders and received an offer for a seat on the board, which he turned down. Then, on April 14, he made an unsolicited offer for the company at a price of $54.20 per share -- widely interpreted as a nod to the marijuana culture.
Twitter initially attempted to hamper Musk's push by introducing a "poison pill" intended to limit his ability to acquire a sizable stake in the stock. But the board was forced to the negotiating table over the weekend after unveiling a $46.5 billion funding package for the deal.
The company's board also received calls from some of its largest shareholders, including active and passive investors, urging it to accept the offer, people familiar with the talks said. Investors had little confidence that the stock price would rise significantly above Musk's bid anytime soon.
If the deal goes through, it would be one of the largest leveraged buyouts of all time -- a feat few on Wall Street would have believed possible given the size of the deal. The transaction is expected to close later this year, subject to regulatory and shareholder approvals, the company said.
"Twitter's board of directors conducted a thoughtful and comprehensive process to evaluate Elon's proposal, with a focus on value, safety and funding," said Bret Taylor, chairman of Twitter.
He added, "The proposed transaction will generate a significant cash reward and we believe this is the best path forward for Twitter shareholders."
Musk has taken on $25.5 billion in debt -- including a $12.5 billion margin loan for his Tesla shares -- from a group of banks led by Morgan Stanley, his financial adviser. He's also committed to providing $21 billion in equity for the acquisition, which means he'll have to pay more than 70 percent of the purchase price if he can't find other financiers.
The deal could still fail if it's blocked by regulators or if Musk fails to meet the equity component of the deal. According to people familiar with the negotiations, Musk is currently in talks with a number of wealthy individuals and institutional investors about backing this portion of his offering.
Musk is required by law to provide the funds for the deal. There is also a transfer fee, but the terms will not be known until the merger agreement is filed with securities regulators.
In announcing his bid for Twitter, Musk outlined plans to relax the social media platform's content moderation guidelines and described himself as a "free speech absolutist."
Republicans hope the deal could pave the way for Donald Trump's return to the platform after the former president was banned for repeated violations of hate speech and misinformation rules.
However, Trump appeared to rule out a return to the platform, telling Fox News on Monday that he would be communicating through his own social media company, Truth Social.
The deal will mark another turbulent period for employees at Twitter, which recently replaced its boss, co-founder Jack Dorsey, with longtime engineer Parag Agrawal.
Supporting the deal, Dorsey tweeted that Twitter is "the closest thing to global consciousness" but it "belongs to Wall Street and the advertising model [and] taking it back from Wall Street is the right first step." Musk has indicated that he wants to move Twitter away from relying heavily on digital advertising.
"I have faith in his mission to expand the light of consciousness," Dorsey said of Musk.
Twitter rushed to reassure advertisers after announcing the deal, telling them to get on with business as usual and underlining that it was sticking to its existing product roadmap, according to screenshots of emails sent by the Financial Times are available.
Musk has already worried some employees after raising the possibility of closing the company's San Francisco headquarters and making a number of other controversial proposals, such as: B. Pay board members $0 salary.
Agrawal wrote on Twitter Monday: "Twitter has a purpose and meaning that impacts the entire world. We are deeply proud of our teams and inspired by the work that has never been more important."