Elon Musk Buys Twitter for $44 Billion

          Elon Musk Buys Twitter for $44 Billion

Twitter announced on Monday that it has agreed to sell itself to Elon Musk for $44 billion in a transaction that may expand the billionaire's business empire and put him in command of one of the world's most popular social networks.

In little than a month, the Tesla and SpaceX CEO became one of Twitter's largest shareholders, was offered and declined a seat on its board, and made a bid to buy the firm.

Shareholders would receive $54.20 in cash for each share of Twitter stock they own under the terms of the agreement, which matches Musk's original offer and represents a 38 percent premium over the stock price the day before Musk declared his position in the firm.

The board of directors of Twitter authorized the deal, which is now up for a shareholder vote. Analysts believe there will be no regulatory roadblocks.

When Musk presented his financing plan and no other bidders surfaced, Wedbush analyst Daniel Ives claimed the company's board of directors was "against the wall."

"Free speech is the backbone of a functional democracy, and Twitter is the digital town square where critical issues affecting humanity's future are debated," Musk said in a statement released Monday. "Twitter has enormous potential, and I'm excited to work with the company and the Twitter community to realize it."

Twitter's board of directors unanimously authorized the purchase, which is scheduled to close this year. It comes after Musk stated last week that he had secured $46.5 billion in finance to buy Twitter, an apparent turning point that prompted the company's board of directors to seriously explore the purchase. The board met on Sunday to consider Musk's proposal.

In a statement, Twitter independent board chair Bret Taylor stated, "The Twitter Board conducted a thoughtful and comprehensive process to review Elon's proposal with a deliberate focus on value, predictability, and finance," calling the acquisition "the greatest way forward for Twitter's stockholders."

Following the announcement of the acquisition, Twitter shares were up about 6%, hovering around $51.84, slightly below the offer price. The transaction is subject to shareholder and regulatory approval.

The purchase price is over 40% more than the closing price the day before Musk announced his purchase of more than 9% of the company.

Nonetheless, the offer is far lower than the $70 range at which Twitter was trading last year.

"I believe we would have made much more than what Musk is currently offering if the company had been given the time to evolve," said Jonathan Boyar, managing director of Boyar Value Group, which owns a stake in Twitter. "If the public markets do not appropriately value a company, an acquirer will eventually do so," he continued.

Musk's decision follows in the footsteps of other billionaires who have purchased control of prominent media platforms, such as Jeff Bezos' purchase of the Washington Post in 2013.

Musk has obtained $25.5 billion in debt and margin loan funding, as well as a $21 billion equity commitment, according to Twitter. According to Forbes, Musk is worth $268 billion and has stated that the economy of Twitter is not his primary focus.

Twitter CEO Parag Agrawal said in an internal message to staff that he will conduct an all-hands meeting with Taylor on Monday afternoon to answer questions regarding the purchase. "I understand this is a big transition, and you're probably thinking about what it means for you and Twitter's future," he continued.

Musk is the CEO of both Tesla Inc (TSLA.O) and SpaceX, and it's unclear how much time he'll spend on Twitter or what he'll do with it.

What Musk's actions mean for Twitter

Musk is a well-known Twitter user as well as a contentious one. On the network, he has over 83 million followers and has used it for everything from sharing memes and discussing his enterprises to attacking politicians, distributing false information on Covid-19, and making derogatory remarks about the transgender community.

Musk has stated several times in recent days that his goal is to strengthen free expression on Twitter and try to "unlock" the platform's "amazing potential."

In a statement, Musk added, "Free speech is the core of a functional democracy, and Twitter is the digital town square where subjects crucial to humanity's future are debated."

Musk said he wants to "make Twitter better than ever by expanding the platform with new features, making the algorithms open source to improve trust, fighting spambots, and authenticating all people" in a statement released Monday. In another tweet on Monday, he expressed his desire that "even my harshest detractors remain on Twitter because that is what free expression means."

Nonetheless, some industry experts are concerned that Musk's goal for free speech on Twitter may result in the platform's efforts to combat hate speech, misinformation, harassment, and other negative content being undone. Others questioned whether Musk would reinstate former President Donald Trump's Twitter account, which was suspended early last year for encouraging violence in the aftermath of the Capitol Riot. Such a move might have far-reaching implications for the future presidential election in the United States in 2024.

While Twitter is smaller than some of its social media competitors, it wields disproportionate power in the online and offline worlds because it is used by a large number of politicians, public figures, and journalists, and has served as a model for other platforms in terms of how to handle harmful content.

"Do not allow Twitter to become a breeding ground for hate speech or falsehoods that undermine our democracy," warned Derrick Johnson, president of the NAACP, in a statement issued after the deal was announced on Monday.

Twitter has entered a new and uncertain era

Many Twitter fans worried if the firm would try to find another buyer in the days since Musk's initial bid, especially after the company put in place a poison pill to make it more difficult for Musk to acquire the company without its consent.

However, according to CFRA senior equities analyst Angelo Zino, Twitter's board is taking Musk's offer more seriously since "an alternative proposal from a 'white knight' may be tough to come by, especially given the decrease in asset prices from social media businesses in recent weeks/months."

Late Monday, former Twitter CEO Jack Dorsey tweeted about the arrangement, thanking both Musk and new Twitter CEO Parag Agrawal for "pulling the company out of an impossible situation."

"My only gripe with Twitter has always been that it is a for-profit company. Wall Street and the advertising model have both owned it. Taking it back from Wall Street is the first step in the right direction "he stated

It's unclear whether Agrawal, who succeeded founder Jack Dorsey as CEO in November, will stay on as CEO following the takeover. Musk earlier compared Agrawal to former Soviet leader Joseph Stalin in a tweet. In his offer letter to buy Twitter, Musk also stated that he "does not have faith in management."

The deal, on the other hand, might bring an end to over a decade of turmoil at Twitter as a public business, during which the company has gone through several CEOs, battled an activist investor, and struggled to ignite growth and properly monetize its important user base.

"Twitter has a purpose and relevance that influences the entire globe," Agrawal said in a statement released Monday. "Deeply proud of our teams and motivated by work that has never been more critical," he continued.