Billionaire entrepreneur Elon Musk closed the deal to buy Twitter Inc. for $44 billion, using one of the biggest leveraged buyout deals in history. The powerful social networking platform that has become a town square for public discourse and a flashpoint in the debate over online free speech will go private after the buyout transaction is complete.
Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion.
The price is 38% more than the stock’s close on April 1, the last business day before Musk disclosed a significant stake in the company, sparking a share rally. Twitter shares were halted for the news.
Bret Taylor, Twitter’s Independent Board Chair, said, “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.”
Parag Agrawal, Twitter’s CEO, said, “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.”
“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,” said Mr. Musk. “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.”
Musk, one of Twitter’s most prolific users with more than 83 million followers, began to stage a hostile takeover by first amassing a stake of about 9% in January. By March, he had ramped up his criticism of Twitter, alleging that the company’s algorithms are biased and feeds cluttered with automated junk posts. He also suggested Twitter’s user growth was inflated by bots. After rejecting an invitation to join the company’s board, on April 14 he offered to take Twitter private, saying he’d make the platform a bastion of free speech and dropping other hints about the changes he’d make as owner.
The deal was unanimously approved by the company’s board but it’s not expected to be completed until later this year. Musk secured $25.5 billion of debt and margin loan financing and will provide about $21 billion in equity to fund the deal, according to the statement.
Going private marks a dramatic turnabout for a company that got its start as a messaging service for sharing your status updates with friends, but quickly blossomed into a way for people to broadcast short posts of 140 characters or less to a public following. Twitter caught fire among politicians, celebrities and journalists and took its place alongside social media stalwarts Facebook and YouTube as a standard bearer of a new, more interactive way of using the web that came to be known as Web 2.0.
Following its birth in 2006, Twitter weathered a series of crises, including management upheaval that saw the removal of co-founder Jack Dorsey in Twitter’s early days and his eventual return in 2015. After an initial public offering in 2013, the company considered selling itself in 2016, drawing the interest of companies from Walt Disney Co. to Salesforce Inc.
Disney called off a deal to buy the platform was just too problematic, CEO Bob Iger revealed in a New York Times interview.
After calling it a “compelling” way to reach consumers, the deal never went through and Disney instead purchased a majority stake in sports streaming site BAMTech.
Then CEO Bob Iger personally said (on Twitter) ‘the nastiness is extraordinary.’
As recently as last week there was little clarity on whether Musk’s bid would succeed. The 50-year-old billionaire himself mused at a TED event the day it was announced that even he had doubts about its prospects. Though the stock initially jumped on news of Musk’s stake in the company, shares have traded well below the original offer price of $54.20 since its announcement — a sign investors were skeptical a deal would come to fruition.
Twitter on April 15 adopted a shareholder rights plan — a measure known as a poison pill — to fend off unwanted bidders. The plan is exercisable if a party acquires 15% of the stock without prior approval, and sought to ensure that anyone taking control of the social media company through open market accumulation pays all shareholders an appropriate control premium, the company said when it disclosed the plan.
But a turning point came last week when the Tesla Inc. CEO pulled together a financing plan that included 12 banks, led by Morgan Stanley. Just days after revealing the plan, Musk met with Twitter executives as the company turned more receptive toward a deal, per Bloomberg News.
