Twitter’s board of directors has approved Elon Musk’s offer to purchase the social media firm and take it private in a transaction valued at about $44 billion, the company announced on April 25.
The company accepted the billionaire entrepreneur’s proposal of $54.20 per share in cash.
“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,” CEO Parag Agrawal said in a company statement.
Musk said in a statement: “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.”
It’s been a roller coaster ride since Musk first acquired a 9.2 percent stake in the tech company earlier this month. From rejecting a seat on the company’s board to multiple Twitter polls sponsored by the billionaire CEO, there have been many twists and turns in recent weeks.
Twitter shares rallied more than 5 percent on the news, topping $51 a share. Shares are up nearly 30 percent since April 4 when Twitter confirmed that Musk had acquired a significant stake in the company.
The board members initially resisted Musk’s offer by adopting a “poison pill” defense to prevent a hostile takeover.
The agreement came after Musk confirmed last week that he had secured $46.5 billion in funding commitments to finance the takeover. This included $25.5 billion in debt financing through Morgan Stanley and other financial firms.
Musk plans to take the company private when the transaction is completed. The deal is expected to finalize this year. Goldman Sachs, J.P. Morgan, and Allen & Co. are working as financial advisers to Twitter, while Morgan Stanley is serving as lead financial adviser to Musk.
The Elon Musk List of Changes
The primary objective behind Musk’s takeover crusade has been to advance the cause of free speech on the social media outlet. Musk has described himself as a “free speech absolutist” and referred to the website as “a de facto public town square.”“I hope that even my worst critics remain on Twitter, because that is what free speech means,” Musk wrote on Twitter just before the deal was announced.
“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,” he stated, according to a Securities and Exchange Commission (SEC) filing.
“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.”
Musk revealed his reluctance about permanent bans, preferring to install “time-outs.” Or if a controversial tweet is posted, Musk wants to “let the tweet exist.”
In March, he suggested that Twitter’s algorithm should be open-source, with code posted on Github to spot mistakes or recommend adjustments. Musk later suggested that users should have the tools to learn if their posts are promoted or demoted without any kind of behind-the-scenes manipulation.
“Having a black-box algorithm promote some things and not other things, I think this can be quite dangerous,” Musk said during an interview at a TED Conference in Vancouver last week.
For years, Twitter users have been clamoring for an edit button on the digital platform.
Musk spotlighted the concept again in an April 4 Twitter poll, asking his users, “Do you want an edit button?” More than 4 million people voted, with a majority endorsing the concept.
Another proposal is an overhaul of Twitter Blue, the company’s first subscription service with access to exclusive special features. Some of these options include cutting the subscription price, removing advertisements, and paying in Dogecoin.
“Everyone who signs up for Twitter Blue (ie pays $3/month) should get an authentication checkmark,” he wrote on Twitter.
“Price should probably be ~$2/month, but paid 12 months up front & account doesn’t get checkmark for 60 days (watch for CC chargebacks) & suspended with no refund if used for scam/spam.
“And no ads. The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive.”
Can Musk Save the Company?
Twitter user numbers have fallen short of Wall Street estimates, and the company recorded a $221 million loss in 2021.If Musk ‘Transforms’ Twitter, Will They Come Back?
Over the past couple of years, many Twitter alternatives have been popping up, including Truth Social, Parler, and Gettr. It is difficult to determine if users who flocked to these social media platforms will return to Twitter after “banning and suppressing” many users, according to Terry Sawchuk, the CEO of Sawchuk Wealth.Of course, the one person that many users are waiting for is former President Donald Trump. Will he be reinstated, or would he even come back at this point?
“I don’t think that there’s a high degree at all for Trump to go back,” Sawchuk noted. “He’s obviously not real happy with the way he’s been treated, and Trump’s not the type of guy that is probably gonna make amends on that.”
The other issue is that Trump has too much money invested in Truth Social, his new social media app.
“I just don’t see Donald Trump ever going back to Twitter,” he stated.
According to Fox News, Trump will formally join Truth Social in the next seven days, as scheduled.
Industry observers are saying any updates that may be enacted by Twitter will be enough to attract new users or bring back those who abandoned the platform years ago.
Following the announcement of the deal, Twitter is anticipated to make immediate changes, beginning with the replacement of CEO Agrawal.
Musk has stated that the platform stifles free expression, particularly since Agrawal took over management from Jack Dorsey. Musk had already indicated his opposition to Agrawal’s appointment.
Additionally, the takeover story will continue to bring attention to, and possibly expand, the platform’s users and their engagement, generating additional ad dollars, according to some analysts.
Investors will undoubtedly be watching the first-quarter earnings report on April 28.
Goldman Sachs recently reaffirmed its “sell” rating on Twitter stock, giving it a price target of $30.
