The board of Twitter has agreed to a $44bn (£34.5bn) takeover offer from Tesla CEO Elon Musk. Twitter 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.
Musk, who made the shock bid less almost two weeks ago, said Twitter had “tremendous potential” that he would unlock.
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.
Bret Taylor, Twitter’s Independent Board Chair, 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.”
The firm initially rebuffed Mr Musk’s bid, but it will now ask shareholders to vote to approve the deal.
Parag Agrawal, Twitter’s CEO, who will reportedly host an all-hands meeting for employees on Monday afternoon to address the news, added,
“Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.”
The transaction, which has been unanimously approved by the Twitter Board of Directors, is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.
Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment. There are no financing conditions to the closing of the transaction.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” said Musk.
“I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”
The company, which launched in 2006, currently has a market cap of nearly $40bn. Its co-founder Jack Dorsey stepped down as chief executive officer in November 2021, handing the reins to Agrawal, the company’s former chief technology officer.
Musk is himself a prominent user of the app, with 83m followers, and tweeted as early as 2017 expressing interest in buying the company. He has signalled that Twitter needs to be transformed as a private company in order to build trust with users and do better at serving what he calls the “societal imperative” of free speech.
“I hope that even my worst critics remain on Twitter, because that is what free speech means,” he tweeted on Monday.
It remains to be seen how Musk will reshape the company, but the billionaire has proposed several changes in recent weeks. They include relaxing its content restrictions, ridding the platform of fake and automated accounts, and shifting away from its advertising-based revenue model.
Elaborating on his goals, Musk added on Monday that he wanted to “make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans”.
The deal is not expected to face serious scrutiny from US competition authorities because Musk’s other major business interests – Tesla, an electric car company, the SpaceX rocket business, and the tunnelling firm the Boring Company – do not compete with Twitter.
It is, however, likely to draw comment from politicians and campaigning bodies given Twitter’s influence as an information source and Musk’s stance on free speech. The purchase also comes amid intensifying criticism of big tech’s power and underscores the ability of wealthy executives to control platforms used by millions.