On April 14, 2022, Elon Musk declared his intent to buy the very popular social media platform, Twitter, and take it private. His proposal was quickly dismissed by Wall Street because it was unclear if he could come up with the money. Twitter also adopted a "poison pill" to avoid Musk from acquiring more than 15 percent of stock but, like he usually does, Musk found a way.
Today, Monday, April 24, it was announced that Twitter accepted Elon's offer for roughly $44 billion. Twitter made a full announcement which reads below.
“Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter will become a privately held company."
The statement continued, "Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter."
Twitter's Independent Board Chair, Bret Taylor, said "The Twitter Board conducted a thoughtful and comprehensive process to assess Elon's proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders."
Elon Makes A Bid on Twitter
Previously, Musk opened up about the deficiencies that he saw in Twitter as a social media service. He stated that he wants to "transform" the company into a "platform for free speech around the globe" but, that would require vast improvements in its product and policies.
Last week, the Tesla founder updated his proposal to take over the platform, adding pressure for his bid to be taken more seriously. A securities filing that was made public on Thursday revealed what Musk put together in order to buy out Twitter. According to The New York Times, the SpaceX founder put together financing from the investment bank of Morgan Stanley and a group of other lenders, who were offering $13 billion in debt financing, plus another $12.5 billion in loans against his stock in Tesla. The rest of what he would need, $21 billion, would be paid for in cash by him.
This proposal by Musk forced Twitter to become more receptive to his bid. In previous public statements the company had said it's board was "continuing to conduct a careful, comprehensive and deliberate review to determine the best course of action in the best interest of the company and all twitter stockholders." And, this openness by the social media platform did not sit well with Wall Street.
Dan Ives, an analyst at Wedbush Securities wrote on Sunday that Musk's big for Twitter will be "the beginning of the end for Twitter as a public company with Musk likely now on a path to acquire the company unless a second bidder comes into the mix."
Musk even went as far as taking his negotiations to Twitter itself. He threatened to take his bids to the company's shareholders in what's called a "tender offer." A tender offer would basically allow him to buy more stakes in the company from the shareholders themselves rather than go through Twitter.
One of his tweets which wrote "Love Me Tender," hinted at his new way of going about his big purchase. He was offering Twitter investors a tender offer to buy their shares for $54.20 apiece. Twitter's initial response to this was the "poison pill" to give them more time to make a decision.
While the poison pill was a strong move made by Twitter, it didn't definitely get rid of Musk. Basically, if enough investors were swooned by Musk's offer, they could then pressure the board to get rid of the poison pill and negotiate with the billionaire.
Elon Musk's Plan For The Major Platform
Musk believes that he can "unlock" Twitter's potential by taking the company private and loosening its rules in regards to what users can post.
In a previous tweet, he wrote, "Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?" He Retweeted that tweet with a new comment and question which reads, "Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy. What should be done?"
Musk wants to give users more "free speech" and also more characters to use that right. He has reportedly talked about allowing longer tweets, pivoting away from ads, and getting rid of spambots.
Musk has also talked about making Twitter's algorithm open source. This means that users would be able to see why things trend the way they do, and exactly why certain tweets appear on our timelines versus others. In other words, he wants to make the operation of Twitter more transparent.
However, Musk wanting to take the company private could mean that it will become a subscription-based service, especially if he wants to remove ads. This alone has sparked a serious question: Will users be willing to pay for something that they've always had for free?