The board of Twitter (TWTR) has accepted Elon Musk’s $54.20 per share cash offer to acquire the company and take it private.
The $44 billion deal, announced on April 25, is expected to close later in 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,” stated Twitter chief executive Parag Agrawal.
“I hope that even my worst critics remain on Twitter, because that is what free speech means,” tweeted Musk.
I hope that even my worst critics remain on Twitter, because that is what free speech means
— Elon Musk (@elonmusk) April 25, 2022
The deal ends a month of dramatic headlines and tweets. It began on March 25, with Musk accusing the company of failing to “adhere to free speech principles” in a way that “fundamentally undermines democracy.”
Within days, Musk disclosed a 9.2% passive stake in the social media powerhouse. Within a month, he was set to run the company.
What will the future hold for Twitter? That is anybody’s guess.
Elon Musk’s Big Adventure
From the outset, Musk’s offer for Twitter felt like a lark. But what began as a series of quixotic tweets about free speech rapidly evolved into a serious leveraged buyout offer, backed by the biggest bundle of acquisition financing ever assembled by one person.
Musk assembled $46.5 billion to fund his Twitter takeover, with his own assets backing two-thirds of that amount. Musk’s portion includes a giant $12.5 billion margin loan secured by his equity stake in Tesla Inc. (TSLA). The remainder comes from bank financing secured by Twitter’s own assets, a classic leveraged buyout arrangement.
Worries about the level of risk assumed in the deal were dismissed out of hand. Musk commented that he “did not care” about the economics of the deal “at all,” and that he was pursuing Twitter because it was “extremely important to the future of civilization.”
An Acquisition Offer or a Stoner Joke?
Shares of Twitter were just shy of $40 heading into April, and reached around $53 per share as Musk accumulated his stake and played footsie with Twitter’s board. The shares never quite got as high as Musk’s $54.20 offer, as investors and market observers reacted with incredulity to his overall approach to the deal.
Some wondered whether the technoking of Tesla was genuine in pursuing Twitter or whether his interest would lapse once he grappled with the challenges of reaching a deal.
Recall that back in August 2018, Musk had tweeted that he had “funding secured” to take Tesla private, at $420 per share. There followed a year of drama as Musk fended off SEC litigation and fierce criticism for his cavalier attitude—starting with criticism of a deal price predicated on a 420 stoner joke.
The offer for Twitter evoked similar reactions at first.
For its part, Twitter adopted a “poison pill,” or a contingency that would have kicked in if Musk had increased his stake to 15% or more. Existing shareholders would have been offered the chance to buy many more shares of TWTR at steep discounts, rapidly diluting Musk’s stake—not to mention Twitter’s stock price.
The present deal means the pill has been taken off the table. But for a second there, Musk’s Twitter big adventure was facing stiff resistance from the company’s board.
What Musk Means for Twitter
To paraphrase the old television ad, Elon was so unimpressed with Twitter he bought the company.
Musk has more than 83 million followers on the platform, and he remains a prolific tweeter. He has tweeted his enthusiasm for Dogecoin, insulted his perceived enemies, shared memes and engaged in culture war commentary—all while mixing in breaking news and enthusiastic updates on his various business ventures, from Tesla to SpaceX to the Boring Company.
When it comes to Twitter itself, Musk has stated that he wants 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.”
Musk is hardly the first ultra-rich entrepreneur to attempt to leverage wealth into media influence. Jeff Bezos bought The Washington Post, Marc Andreessen founded Clubhouse and Peter Thiel willfully shut down Gawker.com.
But Twitter feels different from these efforts, given the platform’s outsized role in the information ecosystem in the U.S. and around the world at the present moment.