Tesla boss, Elon Musk has offered to buy Twitter, saying he is the right person to “unlock” the social media platform’s “extraordinary potential”.
In a surprise announcement, Mr. Musk said he would pay $54.20 a share for Twitter, valuing it at about $40bn. A report recently emerged that Mr. Musk became Twitter’s biggest shareholder after he built up a large stake in the firm. He said that if his offer was not accepted: “I would need to reconsider my position as a shareholder”.
A filing with the US financial regulator appeared to show text and/or voice messages from Mr. Musk to Twitter’s board, showing that he raised the idea at the weekend that the business should go private. Mr. Musk was invited to join the board, but Twitter announced on Sunday, April 10, 2022, that he decided against it.
In the messages published in the filing, Mr. Musk said he was not “playing the back-and-forth game” and said of his offer: “It’s a high price and your shareholders will love it.” He said he would have to sell his shares if the deal did not go through. “This is not a threat, it’s simply not a good investment without the changes that need to be made”.
In his filing with the US Securities and Exchange Commission (SEC), Mr. Musk disclosed that he invested in Twitter because “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. Twitter has extraordinary potential. I will unlock it.”Elon Musk
Response from Twitter Board
Twitter in response to Elon Musk’s proposal, said its board “will carefully review the proposal to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders”.
Mr. Musk currently ranks as the world’s richest man, according to Forbes Magazine, with a net worth of $219bn mostly due to his shareholding in electric vehicle maker Tesla. He also heads the aerospace firm, SpaceX. Dan Ives, Senior Equity Research Analyst at Wedbush Securities, averred Twitter will either be forced to accept Mr. Musk’s bid or find another buyer.
“There will be host of questions around financing, regulatory, balancing Musk’s time (Tesla, SpaceX) in the coming days but based on this filing it is a now or never bid for Twitter to accept. Ultimately, we believe this soap opera will end with Musk owning Twitter.”Dan Ives, Senior Equity Research Analyst at Wedbush Securities
A Seat on the Board
Twitter offered Mr. Musk a seat on its board after it emerged that he holds a 9.2% stake in the company. The role was set to become effective last weekend but then Mr. Musk decided against taking a seat on the board. On Monday, April 11, 2022, Twitter’s Chief Executive, Parag Agrawal tweeted that the decision taken by Mr. Must not to take a seat on the board was “for the best”.
“We have and will always value input from our shareholders whether they are on our board or not. Elon is our biggest shareholder and we will remain open to his input.”Twitter’s Chief Executive, Parag Agrawal
Mr. Agrawal has already warned staff that “There will be distractions ahead”. After the announcement, Mr. Musk posted a crypto tweet of a smiling emoji with its hand over its mouth. He gave a hint of the things he would like to change at Twitter. He suggested changes to the Twitter Blue premium subscription service which was launched last year in Canada and Australia including slashing the price, banning advertising and giving users the option of paying the monthly fee with the cryptocurrency, Dogecoin.
Mr. Musk also asked his 81 million followers on Twitter whether the company is “dying” and if its headquarters should be turned into a homeless shelter.