Billionaire Elon Musk already owns Twitter. He bought the social network for 44,000 million dollars and his next plan, once the operation is completed, is to take it out of the stock market and turn it into a private company.
Under the terms of the deal, the Tesla CEO will pay $54.20 per share in cash for Twitter. The purchase price represents a 38% premium to its stock’s closing price on April 1, 2022, which was the last trading day before Musk revealed his roughly 9% stake in the social network.
Following Monday’s announcement, Twitter shares rose 5.66% to $51.70 per unit, translating into a market gain of $2.218 million and ending with a market cap of $41.393 million.
Since last April 4, when the tycoon became a minority shareholder, the shares of the social network have risen 3.46 percent.
In Monday’s statement, Twitter reported that Musk is providing about $21 billion and has secured $25.5 billion in debt and “margin loan financing,” adding that “there are no financing terms for the closing of the transaction.” transaction”.
“Twitter’s board of directors undertook a thoughtful and comprehensive process to evaluate Elon’s proposal with a deliberate focus on value, certainty and funding. The proposed transaction will generate a substantial cash premium, and we believe it is the best way forward for Twitter shareholders,” said Bret Taylor, the social network’s independent chairman of the board.
Parag Agrawal, CEO of Twitter, said: “Twitter has a purpose and relevance that impacts the entire world.
About its acquisition, Elon Musk said that he wants to “make Twitter better than ever, improving the product with new features, making algorithms open source to increase trust, defeating spam bots and authenticating all humans. Twitter has enormous potential.”
He added that “freedom of expression is the basis of a functional democracy, and Twitter is the digital public square where vital issues for the future of humanity are debated.”
While in a tweet the tycoon who runs Tesla said: “I hope even my worst critics stay on Twitter, because that’s what freedom of expression means.”
Meanwhile, Tesla shares ended Monday slightly down 0.70% on the Nasdaq at $998.02 per unit and are down 12.87% since Musk became the majority shareholder on April 4.
Discussions about the deal, which seemed uncertain last week, gathered pace over the weekend after Musk lured Twitter shareholders with the financial details of his offer.
Under pressure, Twitter began negotiating with Musk to buy the company at the proposed price of $54.20 per share. Now, the deal ends Twitter’s run as a publicly traded company since its 2013 initial public offering.
Musk said last week that he had raised $46.5 billion to make the purchase, thanks to two bank loans from Morgan Stanley and also thanks to his personal fortune.
It also considered launching a hostile takeover bid directly through shareholders, to bypass the board of directors.
“Once the financing has been presented with the threat of a hostile takeover bid, the board of directors cannot … appeal to a second bidder,” said Dan Ives of Wedbush Securities on CNBC.
That put them against a rock and a hard place and forced them to negotiate,” added the analyst.
According to the press, Twitter’s board of directors met on Sunday to review the billionaire’s proposal. The board had initially been reluctant and used the so-called “poison pill” clause to make the takeover more difficult.
That clause states that if one shareholder reaches more than 15% of Twitter’s capital, the board reserves the right to sell the shares to all other shareholders. Musk currently owns just over 9% of the capital of the social network.
On Friday, the businessman of South African origin met with several shareholders by video call, to defend his purchase offer.
Shortly after entering the capital of the group, the eccentric founder of Tesla was invited to join the firm’s board of directors, but declined the offer.
With more than 82 million followers, the richest man in the world – his fortune is estimated at 269,000 million dollars by Forbes – uses his Twitter account almost daily to give news about his companies, joke and even launch provocations.
In fact, Musk could also seek to make Twitter more profitable and increase the number of users. He has already suggested modifications to the formula for paid subscriptions to the social network, Twitter Blue.
The San Francisco group will publish its quarterly results this Thursday before the opening of Wall Street.
The transaction, unanimously approved by Twitter’s Board of Directors, is expected to close in 2022, subject to Twitter shareholder approval, applicable regulatory approvals and the satisfaction of other customary closing conditions.
Republicans applaud the purchase
Republicans in the US House of Representatives celebrated the news, calling on Tesla’s chief executive to allow former President Donald Trump to return to the social network.
“Hey @elonmusk this is a great week to free @realDonaldTrump,” the House Republican Conference, which currently represents 209 lawmakers, tweeted.
Congressman Jim Jordan, a member of the Freedom Caucus of conservative House Republicans, said the deal would be good for shareholders and free speech. Jordan and other Republicans have criticized Twitter for barring access to Trump and other leading conservatives.
Lawmaker Marjorie Taylor Greene, whose personal account was permanently banned from Twitter for posts that repeatedly violated the social network’s Covid-19 misinformation policy, said on her official Congressional account: “I should get my account back. Twitter staff.”
The platform banned Trump’s account due to the risk of further violence following the storming of the US Capitol on January 6, 2021.
“I think this deal seems to be good for the shareholders; for free speech, for the First Amendment,” Jordan told Fox News, referring to the constitutional text that guarantees free speech.
Trump will not return to Twitter
Former US President Donald Trump has said he will not return to the social media platform Twitter even if his account is reinstated, following Elon Musk’s announcement that he would buy the company.
Trump told Fox News that he will formally join his own Truth Social network in the next seven days, as planned.
“I’m not going to go to Twitter, I’m going to stay on Truth,” Trump told Fox News. “I hope Elon buys Twitter because he’s going to make improvements to it and he’s a good man, but I’m going to stay on Truth,” he added. (With information from agencies)