As corporate soap operas go, the one unfolding between Elon Musk and Twitter would make for a must-see streaming series. The machinations of a billionaire tech mogul staging a hostile takeover of a social media platform sounds like the stuff of fiction.
On Monday, it became all too real. Twitter announced that it had accepted Musk’s terms, in an acquisition deal worth $44 billion in cash. Indeed, the Tesla chief executive officer prevailed, despite concerns from employees, users and the board itself, which even attempted a “poison pill” to buy up shares and dilute Musk’s ownership.
According to the announcement, “Twitter Inc. 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.”
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The deal is expected to close later this year. A key element in winning over the board was Musk lining up $46.5 billion in financing for the deal.
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.”
Twitter said Musk has arranged $25.5 billion of fully committed debt and margin loan financing while he will provide about $21 billion in equity commitment. For the world’s wealthiest man, the acquisition will cost some 15 percent of his net worth.
The per-share price of $54.20 amounts to a 38 percent premium above the value at the time the offer was first made, over a week ago although below the $70 a share that Twitter had been trading at last year.
Musk had been picking up Twitter shares until he became the company’s largest shareholder, with a stake of more than 9 percent. He publicized his intentions to acquire the company and take it private, commenting via social media — including Twitter — and filing documents with the Securities and Exchange Commission.
He cited “free speech” as his motivation, and explained that he wanted to take the company private so he could stop it from squandering its “extraordinary potential.”
“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,” Musk said in a statement Monday. “Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.”
Skeptics like investor and Dallas Mavericks owner Mark Cuban believed it was a publicity stunt to drive up share value, while others took it more seriously — such as private equity firm Thoma Bravo, which was reportedly interested in acquiring the company to fend off Musk.
When the acquisition closes, the platform will be under the control of an outspoken firebrand that has slung deep criticisms at the company over what he deemed censorship. Apparently Musk has plans to nix Twitter’s content moderation policies as a key order of business.
What this means for Twitter’s employees, its 300 million-plus users or its own evolution, as it aspires to e-commerce with the recently launched Twitter Shops, remains to be seen. Within the company, early reactions paint a fractured portrait, as some staffers seem rattled, or at least confused about what the deal means to their own shares, while others appear to welcome the change.