Twitter agrees to go private; Musk to buy the company for $44 billion
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Twitter today agreed to q be bought out by Elon Musk for $44 billion or $54.20 a share in cash. Musk, in a statement, reiterated his support for free speech and mentioned some of the changes that he wants to bring to the site. “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.”
“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 multi-billionaire said.
The richest man in the world with a net worth estimated at approximately $270 billion, Musk had bid $43 billion to buy Twitter and the company decided to fight by having the board issue a poison pill that would have gone into effect once someone purchased 15% of Twitter. Seeking to dilute Musk’s holdings, the poison pill would have allowed the company to sell shares to stockholders at a discount price. Musk owned 9.2% of Twitter’s shares when he first publicly announced his bid.
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’s stock price closed on Monday at $51.70, up $2.77 or 5.66%. Each Twitter stockholder will receive $54.20 in cash as Twitter becomes a private company. Twitter CEO Parag Agarwal stated today, “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 is expected to close sometime this year and stockholders will get to vote on the deal. To finance the purchase of Twitter, Musk arranged $25.5 billion in debt and margin loan financing. He is adding $21 billion in equity financing. Musk himself is one of the most popular figures on Twitter with over 83 million followers.
Musk has the opportunity to become the new face of Twitter replacing co-founder Jack Dorsey. Dorsey stands to make a ton of money from the deal with his 18,042,428 shares of Twitter bringing him $978 million once the transaction is closed.
Over the years Twitter has been available over several different mobile platforms including iOS, iPadOS Android, Windows Phone, BlackBerry, and Nokia S40.
While there was no comment from The White House regarding the deal, spokesperson Jen Psaki said, “No matter who owns or runs Twitter, the president has long been concerned about the power of larger social media platforms.” Lawmakers also have questioned whether legislation is required to keep social media firms like Twitter from spreading fake news and disinformation.
Back in 2018, when Facebook Chairman and CEO Mark Zuckerberg spent consecutive days testifying before the Senate and the House, the elected representatives in both chambers showed that their knowledge of how tech works is pretty low. For example, one lawmaker couldn’t believe that Facebook is free. So he asked Zuckerberg how his company makes money and with just a hint of an eye roll, Zuckerberg explained that Facebook sells ads.
Speaking of ads, according to Statista, at the end of the fourth quarter of 2021 Twitter had 217 million daily active monetized viewers. That was up 13% on a year-over-year basis.
Questions & Answers
Q.What are some of the key changes Elon Musk plans to implement for Twitter?
What are some of the key changes Elon Musk plans to implement for Twitter?
A.
Elon Musk plans to enhance the product with new features, make the algorithms open source to increase trust, defeat spam bots, and authenticate all human users. He views Twitter as vital for free speech and democracy.
Q.How did Twitter's board initially react to Elon Musk's bid to buy the company?
How did Twitter's board initially react to Elon Musk's bid to buy the company?
A.
Twitter's board initially decided to fight Musk's bid by issuing a 'poison pill'. This would have allowed the company to sell shares to stockholders at a discount price to dilute Musk’s holdings once he purchased 15% of the company.
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