Elon Musk will soon be the owner of Twitter, according to reports from their Board of Directors.
The Internet and Twitter itself exploded when Elon Musk announced that he was now the largest shareholder of the microblogging turned social media platform. Then Musk doubled down, offering to purchase Twitter outright. The CEO and Board of Directors responded, enacting a plan to flood the market with additional shares if Musk – or any shareholder – amassed 15% or more shares, indicating the potential for a hostile takeover.
The plan, dubbed a poison pill, did little to slow Musk’s roll as he pulled together equity financing, offering a 38% premium over the share price on April 1, 2022. The date is significant as the last trading day prior to Musk’s announcement of his 9.2% stake in the company. Musk had been blasted for attempting to manipulate the stock market once again with the news.
Instead of focusing on the board, Musk reached out to shareholders, who exercised their rights, pushing hard for the board to negotiate with the billionaire. Sunday, the Board sat down with Musk, and by Monday midday, the deal was set.
“The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”
When Musk first bought into Twitter, it was trading just under $28 a share. It peaked last year at just over $70 per share, and at the time of this reporting was hovering around $51.
Upon the conclusion of the sale, likely to happen later this year, each share of Twitter will be purchased for a final price of $54.20 – and the company will go private once again. When Twitter launched their IPO in 2013, it had a market value of $31-billion. When the deal is finalized, subject to shareholder agreement and regulatory approvals, Musk will spend around $45-billion, including his personally held shares.
It may not benefit him in the way he thinks.
Free Speech on Trial?
Musk’s initial pitch to the Twitter board was compelling:
“I invested in Twitter as 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.”
In a viral poll on Twitter the week before, Musk asked if people believed that Twitter rigorously adhered to the principle of free speech. The overwhelming response – by a 70-30 margin – was no.
But not everyone is on board, or believes that Musk is aiming at free speech when acquiring Twitter.
Searches for “Delete Twitter” exploded 910% in the first hour following Elon Musk’s confirmed take-over of Twitter, according to AskGamblers.com.
A spokesperson for AskGamblers.com commented on the findings, “It’s interesting to see how Twitter users are disappointed when the world’s richest man buys out one of the most popular social media platforms in the world for $44bn.
“Twitter users could be frightened by allowing their privacy and personal information to get into the hands of a single person that will own their data. As Twitter is an effective political and social weapon in today’s world of propaganda, that can greatly influence elections and public opinion, having all that power in the hands of a single individual is a scary thought, and many people will react and have reacted negatively to the news of the agreement.”
Musk’s response to the criticism was simple and concise: “I hope that even my worst critics remain on Twitter, because that is what free speech means”
Upgrades and Enhancements
In his pitch for a takeover bid, Musk laid out his plans for taking Twitter to the next level.
“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.”
It remains to be seen if Musk and his team can accomplish that. But his companies do have a track record of success in other areas, despite various controversies and ethical questions that arise from time to time.
Trading of Twitter shares was halted today, given the news, and Twitter announced it will release Q1 2022 earnings results before the market opens Thursday, but will not do their usual conference call for shareholders, pending official word.
Shares of Tesla dropped following the news, but recovered later, and traded slightly below the market opening price.
Originally published at Wealth of Geeks
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