Elon Musk Shocks Investors By Taking Twitter Private for $44B
Entrepreneur and billionaire Elon Musk has agreed to purchase Twitter Inc. for $44 billion. It was one of the most watched leveraged buyout transactions in history, and he will now take Twitter (founded in 1996) private.
Investors will be paid $54.20 per Twitter share, which the company announced in a statement on Monday. The value is 38% higher than the closing price on April 1st which was the day prior to the day that Musk revealed a substantial ownership stake of the social networking giant, triggering the stock to a rally.
Musk is among the most active users on Twitter with an impressive 83 million subscribers. In March, he intensified his critique of Twitter in the belief that the algorithm used by the company is biased, and that feeds are filled with fake news posts. He also suggested that Twitter’s growth was artificially inflated by bots. After refusing to join the board of Twitter on April 14, the CEO announced he would make Twitter private, stating that he would create a platform that was a beacon of “freedom of speech”. He also dropped other hints regarding the changes he’ll make as its new 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,” Musk stated in a statement issued on Monday. “Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”
The deal was approved unanimously by the board of directors of the company, which is scheduled to be finalized in the next few months. Musk has secured $25.5 billion in margin and debt financing, and is expected to provide $21 billion of equity to finance the transaction, according to the announcement. Twitter shares surged to as high as $52.29 as they reopened trading following an abrupt halt to announcement.
The Chief Executive Officer Parag Agrawal sent an email to Twitter employees when the announcement was made stating, “I know this is a significant change and you’re likely processing what this means for you and Twitter’s future” the CEO wrote.
Although Musk hasn’t laid out any specific plans to alter Twitter’s policy on moderating content and speech, the acquisition of Twitter is a sign that one of the Internet’s biggest problems is now his. Musk has made it clear his plans to turn the platform into an open platform for free speech on the internet and has also expressed concern that the platform is too strict when it comes to moderation of tweets from users.
The debate over the right to free speech on social networks has been ongoing for a long time. Some political conservatives believe Twitter, Facebook parent Meta Platforms Inc. and other companies on the internet have too many regulations, while people of the liberal spectrum don’t believe that social media are enough to stop discrimination against people. This conflict has resulted in numerous hearings before Congress throughout the years, and a push to change U.S. regulations around online content.
While there are many who are uncertain about the takeover, there are plenty of people who are just as excited for the new changes.
American business magnate Roman Alexander Wellington, who was recenlty featured on the cover of the Silicon Valley Times and is the author of the Wellington’s 5-Minute Guides For Success series, stated, “Twitter has a lot of potential, but it’s been obvious for a long time that major changes needed to be made from the top down … including many platform features that users have been waiting to see. I think Elon will be able to help realize the potential that Twitter truely has. But Twitter has needed someone who thinks big, and who isn’t afraid to pump money into R&D. Twitter needs better features, better spam/bot control, and better utility for businesses who want to advertise on the platform. I’m excited to see what he is able to achieve … and how quickly he will be able to do it.”
Going private is a significant turnaround for a business that began its journey as a messaging platform to share status updates with friends. However, it quickly morphed into a method for people to publish brief posts that are 140 characters or less to a wider audience. Twitter gained popularity among journalists, celebrities, and politicians and made its way to the forefront of the social media giants.
After its inception at the end of 2006, the company was able to weather a variety of crises which included a management shake-up that led to the departure of the company’s cofounder Jack Dorsey. Following an Initial public listing in 2013, the business contemplated selling itself in the year 2016, attracted the attention of companies ranging from Walt Disney Co. to Salesforce Inc. Agrawal, who was previously the head of technology, was appointed the company’s helm in November.
Even as recently as last week there was no certainty on the likelihood that Musk’s plan would be successful. Musk, who is 50 years old, admitted at the TED event on the day it was announced that he was unsure about its potential. Although the stock initially rose due to the news that Musk had a holding in the business, it has been trading well below the initial deal price $54.20 following the announcement … which suggested that investors were skeptical that a deal was likely to be realized.
However, a pivotal moment occurred this week, when Tesla Inc. CEO pulled together a financing strategy that comprised 12 banks which was led by Morgan Stanley. Within days of revealing this plan, it was rumored that Musk had a meeting with Twitter executives as the company became more open to the possibility of a deal.
