Twitter’s board has accepted billionaire Elon Musk’s offer to buy the social media company and make it private. The company confirmed this on Monday April 25.
The to and fro of the buyout has at long last settled down following half a month of meetings about this deal. Elon Musk had proposed to purchase the organization at $54.20 per share, which was his best quote.
Meanwhile, the stock closed up 5.64% for the day after it was halted for the news.
After the buyout announcement, the Tesla CEO then said:
“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.”
The cash deal at $54.20 per share is valued at around $44 billion, according to the press release. Twitter will become a private company once the deal is complete.
Assuming the deal closes and Musk takes ownership of Twitter, the company will be controlled by the world’s richest person and someone who’s been a heavy critic of the platform while using it in legally contentious ways, mostly through sensitive posts about his car manufacturer, Tesla.
Though Musk has indicated that his primary interest in Twitter has to do with what he views as the company’s censorship of free speech, Musk critics are justifiably concerned that the billionaire’s control over the platform will result in the silencing of their voices and others with whom he may disagree.
Musk’s offer became more concrete after he announced in a Securities and Exchange Commission filing that he received commitments for $46.5 billion to help finance the potential deal.
That included about $25.5 billion in debt financing from Morgan Stanley Senior Funding and other firms. He said he committed about $21 billion in equity financing.
Musk said in the same filing he was exploring a tender offer to purchase shares of Twitter directly from shareholders.
Musk’s interest in Twitter comes from his own frequent use of the platform. The Tesla and SpaceX CEO often uses his large platform to share jokes, engage with his 83.6 million followers and make business announcements.
But unfortunately, it brought up some issues. Musk came under SEC investigation after tweeting in 2018 that he had secured funding at $420 per share to take Tesla private.
The agency charged Musk with securities fraud as a result of those tweets. Musk and Tesla reached a revised settlement agreement over those charges in 2019, which Musk is now attempting to terminate.
Musk said at the TED2022 conference in Vancouver earlier this month that he did in fact have funding secured at the time of that tweet, adding that he was “forced to concede to the SEC unlawfully” in the settlement. The SEC declined to comment on Musk’s remarks at the time.
Shortly after the conference, a court filing from a class-action lawsuit by shareholders against Musk revealed that the judge presiding over that case concluded Musk knowingly made false statements about the funding at the time of the tweet.
Also at the TED2022 conference, Musk shared how he would like to see the platform change under his ownership.
He also said he generally would prefer “time-outs” to permanent bans, which could suggest a path for former President Donald Trump to rejoin the platform under Musk’s control. Twitter banned Trump from the platform following his tweets around the Jan. 6 insurrection at the U.S. Capitol, citing “the risk of further incitement of violence.”
Some Republican lawmakers have expressed excitement at the prospect of Musk owning the company after complaining for years of what they say is censorship of conservative voices by mainstream tech companies. Twitter and others have said they do not censor speech based on ideology, but instead enforce their stated community guidelines.
The Transaction of The Deal:
The transaction, which has been unanimously approved by the Twitter Board of Directors, is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.
Mr. Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment. There are no financing conditions to the closing of the transaction.
There are further information regarding all terms and conditions contained in the definitive transaction agreement.
Goldman Sachs & Co. LLC, J.P. Morgan, and Allen & Co. are serving as financial advisors to Twitter, and Wilson Sonsini Goodrich & Rosati, Professional Corporation and Simpson Thacher & Bartlett LLP are serving as legal counsel. Morgan Stanley is acting as lead financial advisor to Mr. Musk. BofA Securities and Barclays are also acting as financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.
In a related story, President Biden officials are worried about Musk’s buyout, since that will allow Former American President Donald Trump to return to Twitter.
Officials within President Joe Biden’s administration are closely watching Elon Musk’s purchase of Twitter, according to more than half a dozen advisors to Biden, including two administration officials.
Some on Biden’s team are growing increasingly concerned the Tesla CEO will allow Trump and other Republican operatives who were banned from Twitter to return to the platform.
They believe Musk’s takeover of Twitter will affect the 2024 presidential election — especially whether the billionaire will allow former President Donald Trump to return to the platform.
Members of Biden’s inner circle and party strategists are concerned about an increase in misinformation on the platform under Musk’s leadership. Former President Barack Obama is among a group of Biden allies privately concerned that Musk’s acquisition of Twitter could lead to a Trump return to the platform, according to a person familiar with the matter.
“Now, Trump will use Twitter to do far more damage to regain power in 2022 and 2024 while Elon Musk has given no indication that he will do anything to stop him,” Mary Anne Marsh, a veteran Democratic strategist, said.
Twitter permanently banned Trump, who had more than 88 million followers, from the platform for spreading false information blamed for inciting the Jan. 6, 2021, riot on Capitol Hill. Allies of Trump’s, including veteran strategist Roger Stone, pro-Trump attorneys Lin Wood and Sidney Powell, and former national security advisor Michael Flynn have also been banned.
Powell, who pushed numerous false election conspiracies, told CNBC in an email she would consider moving to get reinstated to Twitter if the deal closes with Musk.
“I would consider returning, and I’m delighted someone interested in free speech is interested in reclaiming Twitter in the name of truth and freedom,” Powell said on Monday after Twitter made the official announcement.
“Twitter has become kind of the de facto town square, so it’s just really important that people have the, both the reality and the perception that they are able to speak freely within the bounds of the law.” Musk tweeted a similar stance on Monday, saying, “I hope that even my worst critics remain on Twitter, because that is what free speech means.”
Trump has said that he won’t rejoin Twitter if Musk were to finalize a purchase, but people close to him say they still expect the former president to move to have his account returned anyway. Alyssa Farah, who used to work in the Trump administration, said in a tweet that she believes Trump won’t be able to resist getting back on Twitter. “From a free speech perspective, I don’t see how you keep him off Twitter,” she said.
One of the people aiming to persuade Trump to get back on Twitter said his allies are encouraging the former president to invite Musk to Mar-a-Lago, his private club in Florida, if Musk is able to close the deal.
Trump launched his own social media start-up, Truth Social, but it’s reportedly running into multiple hurdles, including executive departures and waning sign-ups for the app.
Musk had a close relationship with Trump when he was president, sitting on two of the president’s advisory councils before stepping down as the U.S. pulled out of the Paris climate agreement. Trump later said in an interview that, he considers Musk one of the world’s “great geniuses.”
Musk has repeatedly criticized Biden for failing to acknowledge Tesla’s role as a leader in the electric vehicle industry.
A group of 18 House Republicans is asking Twitter’s board to preserve all records related to Musk’s offer to buy the company, setting up a potential congressional probe should the party win back the majority this fall.