Elon Musk has finally revealed his endgame for Twitter. After disclosing his 9.2 per cent stake in the social media company earlier this month, Tesla co-founder and CEO Musk has now offered to buy the company outright.
The offer comes after Musk refused to accept the board seat offered by Twitter CEO Parag Agrawal. After refusing to join Twitter’s board, Musk spent time deleting some of his mean tweets about the company and has been largely silent on the platform. However, it is now clear that Musk was planning a hostile takeover of the platform where he spends most of his time.
Elon Musk wants to takeover Twitter
In a filing with the US Securities and Exchange Commission on Thursday, Musk offered to pay $54.20 per share in cash to buy the micro-blogging platform. The offer is a 54 per cent premium over the January 28 closing price and values the company at about $43B, according to Bloomberg. Twitter stock is up more than 11 per cent in after hours trading after closing at $45.85 on Wednesday.
I made an offer https://t.co/VvreuPMeLu— Elon Musk (@elonmusk) April 14, 2022
The world’s richest man says he is making a “best and final” offer to buy Twitter Inc., and is claiming that the company has extraordinary potential. Musk first disclosed his stake of about 9.2 per cent on April 4 and within 10 days, he has offered to take the company private with an outright purchase.
“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 wrote in a letter sent to Twitter Chairman Bret Taylor and disclosed with his SEC filing.
According to the Bloomberg Billionaire’s Index, Musk is currently worth about $260B but Twitter has a market valuation of about $37B. If Elon Musk was interested in owning a social media company earlier then the SEC filing today suggests he is motivated to go ahead with his interest.
With over 80 million followers, Musk has used Twitter at his own will. He has used the platform to share memes, troll his opponents, and most recently, to express his criticism of Twitter. His interest in acquiring Twitter began with a question to his followers where he asked if there was a need for an alternate social media platform.
With former US President Donald Trump and some of the members from his administration building their own conversative social platform with lacklustre success, Musk has gone ahead with the idea of purchasing an already established platform. It doesn’t hurt that he is one of the loudest voices on this platform.
What will Elon Musk’s Twitter look like?
At a premium of 54 per cent, the offer from Musk should seem enticing to all the existing shareholders of Twitter. However, it is not likely that Musk is sitting on a cash pile of nearly $50B to go ahead with the deal. Last year, Musk sold about $16B of Tesla Inc stock and the cash left from that sale is seen as the vehicle for his initial 9.2 per cent stake in Twitter.
To bankroll this deal, Musk might have to sell another $50B worth of his stake in Tesla, which is about a third of his stake. For Musk, who has shown disdain for material possessions and has claimed to sleep in his office, his stake in Tesla is the most liquid part of his wealth. It does seem like Musk is willing to forego a portion of that wealth to bankroll his desire to own Twitter.
Now that Musk has shown his real interest in Twitter, the question facing the platform is what it would look like with Elon at the helm. For one, he has shown interest in adding an actual edit button to the platform. An idea that Twitter co-founder Jack Dorsey tried to shut down for so long could become a reality.
He also recently tweeted about turning Twitter’s San Francisco headquarters into a homeless shelter since employees did not come to work there. He even suggested cutting the cost of Twitter Blue subscription and granting an authentication mark to the subscribers. He even criticised several accounts with a large number of followers for not actively posting there.
Will Musk forcefully eject those celebrities off the platform for not sharing whatever was on their mind? It needs to be seen and his suggestion to accept Dogecoin as a payment method did not follow any real thoughts on its implementation. If Musk succeeds in purchasing Twitter, he would have gone from a memelord on the platform to vocal critic to key decision maker.
As a famous saying goes, “With great power comes responsibility” and Musk will need to show his responsibility towards people using the platform to share their thoughts and not just get into fights. Elon Musk has reached heights of success with SpaceX and Tesla but Twitter could become his biggest test yet.
Elon Musk’s letter to Bret Taylor in full below:
Chairman of the Board,
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.
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. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.
Twitter has extraordinary potential. I will unlock it.