Twitter is sold to billionaire Elon Musk less than a month after he first revealed his 9.2 per cent stake in the company. Twitter’s board has accepted an offer from Musk to buy the social media company and take it private in a $44B deal.
Earlier this month, the world’s richest man revealed his passive stake in Twitter and launched a saga that culminates in him owning the platform. After he disclosed his stake, Twitter offered him a board seat. Musk first accepted the seat but then refused to join the board and launched a bid to take the company private.
In a filing with the US Securities and Exchange Commission, Musk offered to pay $54.20 per share and valued the company at $43B. In an official statement, Twitter has revealed that Musk is indeed paying $54.20 per share in cash and the transaction is valued at approximately $44B. Musk is offering a 38 per cent premium over the closing price of Twitter on April 1, the last trading day before he disclosed his stake.
Twitter’s impossible position
For years, Twitter has been the platform where news was made and dispersed by some of the biggest companies and individuals. It also became the platform where partisan fights played out, disinformation campaigns were held, and people like Elon Musk shared memes without any mercy.
With over 83 million followers, Musk had unofficially become the loudest voice on Twitter and now, he owns the platform. The deal shows Musk’s ability to buy a social media platform that serves the larger society and also the impossible position that Twitter found itself in, despite being dubbed as the “town square” by Musk.
When Musk first detailed his intention to take the company private, Twitter’s board adopted a “poison pill” that would restrict him from taking more than 15 per cent stake in the company without losing value. It was followed by Musk filing his financing options where he disclosed that he has commitments of $46.5B to buy Twitter.
As soon as Musk first proposed to take Twitter private, it was the end of the road for Twitter being a public company. With his financing options detailed, Twitter’s board went from adopting a poison pill to becoming receptive of Musk’s offer to selling the company.
Bret Taylor, Twitter’s Independent Board Chair, says, “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 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,” said Parag Agrawal, CEO of Twitter.
Twitter: what’s next for the micro-blogging platform and Musk?
The deal is subject to regulatory approval but there doesn’t seem to be any caveats stopping it from being approved. The approval could take as long as six months but once done, Twitter will officially be owned by Elon Musk. As detailed in his financing options, Musk is committing about $21B in equity financing and has secured about $25.5B in debt financing through Morgan Stanley Senior Funding and other firms.
In the long run, the deal could prove expensive for Musk since he has pledged his stake in Tesla to secure the finance. But Musk sees owning Twitter as a trophy win and nothing could have stopped him in his endeavour. The eccentric Tesla chief has repeatedly said that his favourite book as a kid was The Lord of the Rings. With Twitter, it can be said that Musk has found his precious.
Since revealing his passive stake, Musk has said that his primary interest in the platform stems from the company’s censorship of free speech. He has also offered a number of plans to make Twitter better, often by tweeting them. He has proposed dropping the ad model and lowering the subscription price of Twitter Blue.
He has even said that Twitter should accept Dogecoin as a payment option. Like many other Twitter users, Musk is also in favour of adding an edit button. While these service level changes might be easier to implement, the idea of free speech has become a thorny issue on the platform and it is not clear how Musk will enforce basic ground rules. For one, he has offered to open source the algorithms but critics are not persuaded that it would change anything.
“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,” Musk says.
Musk has already received broad support from Twitter co-founder and former CEO Jack Dorsey. Dorsey tweeted that taking Twitter private is the correct first step and Elon’s goal of creating a platform that is “maximally trusted and broadly inclusive” is the right one. However, he added that he does not believe “anyone should own or run Twitter.”
Fellow billionaire and Amazon founder Jeff Bezos trolled Musk’s commitment to free speech with tweets about China. Donald Trump, who was banned from the platform last year after the January 6 insurrection, told Fox News that he will not return to the platform even if his account is reinstated and will opt to use his own Truth Social app.
Twitter CEO Parag Agrawal and Chairman Bret Taylor assured Twitter employees that the company will keep operating as usual. Musk’s criticism of Twitter’s board is well known and it is not clear whether he plans to keep Agrawal and others around. According to Reuters, Agrawal stands to get an estimated $42M if terminated within 12 months of a change of control.
Amidst this weekslong saga involving Musk and Twitter, the employees at the social media company feel left in the dark. For now, Musk seems to have got what he wanted – ownership of Twitter. It needs to be seen whether he is up for the challenge of not only running its day to day operations, in addition to his responsibilities towards Tesla and SpaceX, but fend off all the criticism that might arise being at the helm of Twitter.
Timeline of Elon Musk Twitter saga
- January 31: Elon Musk quietly starts building his stake in Twitter
- March 14: Musk accumulates over 5 per cent stake but misses the deadline to disclose to the SEC by 10 days.
- March 24: Musk begins tweeting his criticism of Twitter
- March 26: Musk asks his followers on Twitter whether a new platform is needed
- April 4: Musk officially discloses his stake and tweets about edit button
- April 5: Twitter CEO Parag Agrawal reveals decision to appoint Musk to the board
- April 9: Musk rejects the board seat
- April 11: Agrawal confirms that Musk won’t join the board and adds “there will be distractions ahead”
- April 14: Elon Musk files his intention to buy Twitter and take it private
- April 15: Twitter board adopts poison pill, officially called as a rights plan limiting Musk from owning more than 15 per cent stake in Twitter
- April 21: Musk files his $46.5B funding option for Twitter buyout with SEC
- April 24: Twitter board begins discussion with Musk about his offer
- April 25: Twitter board confirms the sale
Elon Musk buys Twitter: Top reactions
Twitter users greeted the new owner of the social media company, Elon Musk, in a fashion that is befitting his image. There were a number of memes to mark the beginning of a new era for Twitter or the end of the service, depending on how you view it. There were also tweets from US elected officials demonstrating the partisan line.
Republicans are cheering Elon Musk’s purchase of Twitter while Democrats are ringing the alarm bell. It remains unknown what Musk plans to do with Twitter, but for now, we are assured of memes and laughter. Here are some of the reactions that you should not miss:
WHO DID THIS pic.twitter.com/M7mIOr1hLm— Marc Andreessen (@pmarca) April 25, 2022
I hope that even my worst critics remain on Twitter, because that is what free speech means— Elon Musk (@elonmusk) April 25, 2022
Today is an encouraging day for freedom of speech. I am hopeful that Elon Musk will help rein in Big Tech’s history of censoring users that have a different viewpoint.— Sen. Marsha Blackburn (@MarshaBlackburn) April 25, 2022
.@elonmusk. Bring Twitter to Texas to join Tesla, SpaceX & the Boring company.— Greg Abbott (@GregAbbott_TX) April 25, 2022
We should be worried about any powerful central actor, whether it's a government or any wealthy individual — even if it's an ACLU member — having so much control over the boundaries of our political speech online.— ACLU (@ACLU) April 25, 2022
How it started. How it's going. pic.twitter.com/GfMNLTdw8o— Biz Stone (@biz) April 25, 2022
Elon Musk just bought Twitter for $43 billion.— Umar Saif (@umarsaif) April 25, 2022
For a slightly larger amount, he could have also saved Sri Lanka's international default on its debt of $45 billion.
Such is the power of big wealth. Focus on that startup you have been dreaming about …
Can someone just tell me if I’m rich or fired please— Ned Miles (@nedmiles) April 25, 2022
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. https://t.co/5iNTtJoEHf— Parag Agrawal (@paraga) April 25, 2022
I’m so happy Twitter will continue to serve the public conversation. Around the world, and into the stars!— jack⚡️ (@jack) April 26, 2022
.@elonmusk let me tweet from space pls— Wendy’s (@Wendys) April 25, 2022