Tesla CEO Elon Musk has come full square with his bid to take over Twitter, confirming speculation that he has intention to acquire the social media platform.
On Thursday, the tech prodigy, who recently floated the idea of starting a social media platform free from propaganda and censorship, announced in a filing with the US Securities and Exchange Commission (SEC), a $54.20 per share in cash for Twitter’s acquisition.
The offer which he dubbed “best and final” will represent a 54% premium over the Jan. 28 closing price and amount to $43 billion in value.
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“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk said in the filing. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
“As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced,” he announced.
Musk’s interest in Twitter has gone beyond tweeting funny memes to his more than 80 million followers to owning the microblogging app, which over the years, has been his platform of choice.
On April 4, Musk took a 9.2% share in Twitter, making him the company’s highest shareholder. He was subsequently appointed into Twitter board, an offer he later turned down in the morning to take effect. Musk’s reason to turn down the offer, even though he had earlier accepted it, was as a result of the board’s agreement, which would stop him from increasing his shares as a board member, thus limiting his chances of making a hostile takeover.
Musk’s aim in acquiring Twitter is to bring about the ideas he had floated. In a series of tweets weeks ago, he talked about needed changes bordering on free speech, an edit button and increasing Twitter usage.
After his initial stake became public, Musk immediately began appealing to fellow users about prospective moves, from turning Twitter’s San Francisco headquarters into a homeless shelter and adding an edit button for tweets to granting automatic verification marks to premium users. One tweet suggested Twitter might be dying, given that several celebrities with high numbers of followers rarely tweet.
It is what he reiterated in his letter to the Twitter board. Musk has said he believes Twitter “will neither thrive nor serve [its free speech] societal imperative in its current form,” adding that the app needs to be transformed as a private company.
Twitter is currently valued at $37 billion, making Musk’s acquisition offer irresistible. Wall Street analysts say that Twitter can’t afford to reject Musk’s takeover offer if it’s serious. The social media company’s shares soared 18% at the news.
With about $260 billion net worth, Musk can afford a takeover of Twitter. He has hired Morgan Stanley as his adviser for the takeover. The offer price also includes the number 420, the same number he used in 2018 when he moved to take Tesla private, though it is widely recognized as a coded reference to marijuana.
But even though the deal is largely believed to be irresistible, there is doubt that Twitter will accept it. “The $54.20 per share offer is too low for shareholders or the board to accept,” Vital Knowledge’s Adam Crisafulli said in a report, adding that the company’s shares hit $70 less than a year ago.
Musk said in his letter to Twitter that an unfavorable outcome of the deal may force him out of the company.
“If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder,” he said.
The board had earlier drawn up a clever agreement designed to stop Musk from amassing more shares, curtailing his potential of having a controlling stake.
Twitter CEO Parag Agrawal said in the wake of Musk’s rejection of his board appointment that “There will be distractions ahead, but our goals and priorities remain unchanged. The decisions we make and how we execute [them] is in our hands, no one else’s.”
So it’s unclear if Musk’s offer will change anything. However, the offer presents Twitter with two options; either let Musk take control or allow him to leave as remaining Twitter’s highest shareholder would mean being part of a system he doesn’t believe in.