NEW YORK: Twitter announced Monday that it has agreed to sell itself to Elon Musk in a $44 billion deal that could expand the billionaire’s business empire and put the world’s richest man in charge of one of the world’s most influential social networks.
The deal, which will take the company private, comes at the end of a whirlwind month in which the Tesla and SpaceX CEO became one of Twitter’s largest shareholders, was offered and declined a seat on its board, and made a bid to buy the company — all in less than a month.
According to the terms of the agreement, shareholders will receive $54.20 in cash for each share of Twitter stock they own, matching Musk’s initial offer and representing a 38% premium over the stock price the day before Musk revealed his stake in the company.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where critical issues affecting humanity’s future are debated,” Musk said in a statement Monday. “Twitter has enormous potential, and I’m excited to work with the company and the user community to realise it.”
The transaction, which was unanimously approved by Twitter’s board of directors, is expected to close this year. It comes after Musk revealed last week that he had secured $46.5 billion in financing to acquire the company, an apparent watershed moment that compelled Twitter’s board to seriously consider the deal. The board met on Sunday to discuss Musk’s offer.
“The Twitter Board conducted a thoughtful and comprehensive process to evaluate Elon’s proposal with a deliberate focus on value, certainty, and financing,” Twitter independent board chair Bret Taylor said in a statement, describing the deal as “the best path forward for Twitter’s stockholders.”
Following the announcement of the deal, Twitter stock was up nearly 6%, hovering around $51.84, just shy of the offer price. The transaction is subject to shareholder and regulatory approval.
Twitter CEO Parag Agrawal said in an internal message to employees obtained by CNN that he would hold an all-hands meeting with Taylor on Monday afternoon to answer questions about the deal. “I know this is a big change, and you’re probably thinking about what it means for you and Twitter’s future,” he said.
What Musk’s actions mean for Twitter
Musk is a prominent Twitter user as well as a contentious one. He has over 83 million followers on the platform, which he has used for everything from sharing memes and discussing his businesses to insulting politicians, spreading false information about Covid-19, and making offensive remarks about the transgender community over the years.
Musk has repeatedly stated in recent days that his goal is to strengthen free speech on Twitter and work to “unlock” the platform’s “extraordinary potential.”
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Musk stated in a statement on Monday that he wants to “make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating spam bots, and authenticating all humans.” Separately, he stated in a tweet on Monday that he hopes “even my harshest critics remain on Twitter, because that is what free speech entails.”
Nonetheless, some industry experts are concerned that Musk’s desire for free speech on Twitter may mean reversing some of the platform’s efforts to combat hate speech, misinformation, harassment, and other harmful content. Others questioned Musk’s decision to reinstate former President Donald Trump’s account, which was suspended early last year for violating Twitter’s anti-incitement-of-violence policies in the aftermath of the Capitol Riot. Such a move could have far-reaching consequences for the upcoming US presidential election in 2024.
While Twitter is smaller than some of its social media competitors, it wields a disproportionate amount of power in both the online and offline worlds because it is used by many politicians, public figures, and journalists, and it has occasionally served as a model for other platforms in how to handle harmful content.
“Do not allow Twitter to become a breeding ground for hate speech or falsehoods that undermine our democracy,” said Derrick Johnson, president of the NAACP, in a statement issued in response to the deal on Monday.
Twitter is entering a new and uncertain era.
Many Twitter followers wondered whether the company would try to find another buyer in the days following Musk’s initial bid, especially after the company put in place a poison pill to make it more difficult for Musk to acquire the company without its approval.
However, according to CFRA senior equity analyst Angelo Zino, Twitter’s board may have taken Musk’s offer more seriously due to “the Board’s realisation that an alternative bid from a ‘white knight’ may be difficult to come by, especially given the decline in asset prices from social media companies in recent weeks/months.”
It’s unclear whether Agrawal, who took over as CEO from founder Jack Dorsey in November, will stay on after the takeover. Musk previously shared a meme that compared Agrawal to former Soviet leader Joseph Stalin. Musk also stated in his offer letter to purchase Twitter that he lacks “confidence in management.”
The deal, on the other hand, could put an end to Twitter’s nearly a decade of turmoil as a public company, during which it has cycled through CEOs, dealt with an activist investor, and struggled to ignite growth and successfully monetize its influential user base.
According to Agrawal’s statement on Monday, “Twitter has a purpose and relevance that impacts the entire world.” “Deeply proud of our teams and inspired by work that has never been more important,” he added.