The Tesla boss said he wants to ‘make Twitter better than ever’ and that the social media platform has ‘tremendous potential’.
Elon Musk is acquiring Twitter in a $44bn deal.
The social media giant confirmed this evening (25 April) that it has entered into a definitive agreement to be acquired by an entity wholly owned by Musk for $54.20 per share in cash.
This transaction, which will take Twitter private, is valued at approximately $44bn. It represents a 38pc premium on Twitter’s closing stock price on 1 April.
“The Twitter board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty and financing,” said Bret Taylor, the board chair.
“The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”
Twitter said the acquisition was unanimously approved by the board, and is expected to close later this year subject to shareholder and regulatory approvals.
In a statement about the deal, Musk described Twitter as the “digital town square” where matters are debated.
“I 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,” he added.
“Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”
The price of Twitter shares went up by more than 4.5pc in pre-market trading earlier today following reports that a takeover offer from Musk could be accepted.
His plans to take over Twitter were first reported earlier this month, when the Tesla and SpaceX boss made what he called a “best and final” offer to buy the social media platform.
A filing with the US Securities and Exchange Commission (SEC) published on 21 April showed that Musk had been exploring a tender offer to acquire the company.
The documents said Musk had received commitments for funds to make a deal, including $25.5bn in debt financing from Morgan Stanley and other firms, and around $21bn in equity financing.
Twitter began negotiations with Musk over the weekend after shareholders became impressed by the financing details in his offer, Reuters reported yesterday (24 April).
It came after uncertainty over whether Twitter would accept a takeover offer from the tech entrepreneur. Last week, the company’s board of directors said Twitter was adopting a limited duration shareholder rights plan – also known as a ‘poison pill’ – which was seen as a way to protect the company from a hostile takeover.
“The Rights Plan is intended to enable all shareholders to realise the full value of their investment in Twitter,” the board wrote in a statement at the time.
“[It] will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
Since the start of April, a lot has ensued between Musk and Twitter. First, he became one of the company’s biggest stakeholders, and there were plans to have him installed on the company’s board.
Days after it was revealed that Musk would not become a Twitter board member after all, he offered to buy the company and take it off the stock market.
“Twitter has extraordinary potential. I will unlock it,” he wrote in a letter at the time addressed to board chair Taylor. He added that he believes in Twitter as a platform for “free speech” and said it “needs to be transformed as a private company”.
Musk has been critical of Twitter in recent weeks. At the end of March, he asked his more than 80m followers in a tweet whether the platform “rigorously adheres” to the principle of free speech.
“Given that Twitter serves as the de-facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” he added in a follow-up tweet. “What should be done?”
He then asked followers whether a new social media platform was needed, and said he was giving “serious thought” to building one.
These tweets came after Musk had started building up a stake in Twitter – a move that has also come under the microscope. Earlier this month, a Twitter shareholder sued Musk for failing to promptly disclose that he had bought a significant stake in the company.
Musk had been acquiring shares since January and acquired 5pc by 14 March, meaning he needed to notify the SEC by 24 March under the US agency’s rules. However, the lawsuit document stated that Musk continued to amass shares before notifying the SEC.
With additional reporting by Sarah Harford
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Elon Musk. Image: Thomas Hawk via Flickr (CC BY-NC 2.0)