Famous entrepreneur Elon Musk settled is scheduled to buy Twitter Inc. for $44 billion, operating one of history’s most significant leveraged buyout contracts. In addition, there are plans to take the 16-year-old social media platform that has become a home of free speech to a private network.
On Monday, the company declared that investors would acquire $54.20 for each Twitter share they own. The price is 38% more than the stock’s close on April 1, which was the last business day before Musk announced a significant stake in the company, sparking a change in the data.
The entrepreneur is one of Twitter’s most popular users. He has more than 83 million Twitter followers. After declining an invitation to join the company’s board back on April 14, he offered to take Twitter private, saying he’d make the platform a hub for free speech and other suggestions he’d make as the owner.
“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,” The Billionare stated in the statement on Monday.
The company’s board approved the deal, and it is expected to be completed later this year.
Musk’s new buy includes a provision that the billionaire must pay the company a fee if he were to walk away or break.
An email was sent by Chief Executive Officer Parag Agrawal to Twitter employees informing them of a companywide conference planned for 2 p.m. to talk about the deal. He began the letter with, “I know this is a significant change, and you’re likely processing what this means for you and Twitter’s future,”
Musk hasn’t drafted a detailed plan to alter Twitter’s guidelines around speech and content moderation; however, he has spoken openly about making the platform a haven for unfettered speech online.
The discussion about free speech on social media has been fuming for years. It all started as the network grew. The network has punished more people due to tweets. Some political conservatives think Twitter, Facebook parent Meta Platforms Inc., and other internet companies have “too many rules.” On the other hand, some liberals don’t believe social networks go far enough to prevent the spread of hate online. This topic, in particular, led to multiple congressional hearings.
Following the company’s start in 2006, it went through many ups and downs, including a series of crises regarding management turmoil that led to the removal of co-founder Jack Dorsey in Twitter’s early days. He returned in 2015 but not long after, the company considered selling itself in 2016. The network also caught the attention of big-time companies like Walt Disney Co., Salesforce Inc., and others.
Recently the 50-year-old billionaire spoke on it at a TED event the day it was announced that even he had doubts about the decision. Though the stock initially jumped on news of Musk’s stake in the company, shares have traded well below the original offer price since its announcement, which made sign investors think the deal would flop.
On April 15, Twitter adopted a shareholder rights plan to take the guard off unwanted bidders. The rule is exercisable if a party obtains 15% of the stock without initial approval. It is put in place to ensure that anyone taking control of the social network company through open market collection pays all shareholders a reasonable control premium.
After Musk’s bid was accepted, Twitter locked down changes to its platform through Friday.Twitter imposed a temporary ban to keep employees who may be feeling enraged about the deal from going bad. Many of the company’s workers have voiced discontentment about Musk taking control.
As part of the announcement, Twitter stated it would report first-quarter gains as planned on April 28, right before the market opens in New York, but would not host a call to discuss the results.
As the U.S. Securities and Exchange Commission will have to examine the procedure once Twitter files a primary proxy statement, the regulator does not have the power to block the merger right away.
However, the SEC can slow the process by asking Twitter for clarification on elements of the deal, according to Kenneth Henderson, a partner at Bryan Cave Leighton Paisner in New York. Twitter’s shareholders will vote to approve the transaction once all of the agency’s inquiries are answered.
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