Twitter’s board of directors has agreed to sell the company to Elon Musk for $44 billion, the company announced Monday.
“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 said in the purchase announcement. “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.”
The deal, pending shareholder approval and expected to close later this year, comes just 10 days after the Twitter board approved a poison pill to prevent a hostile takeover in response to Musk’s attempt to buy the company. Board members started taking Musk’s offer more seriously after he lined up $46.5 billion in financing. The sale agreement was announced hours after reports that a deal between Twitter and Musk was close.
The deal is “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 announcement said. “Upon completion of the transaction, Twitter will become a privately held company.” Twitter’s stock price was up 5.7 percent today.
Board cites “thoughtful and comprehensive process”
Twitter Board Chairman Bret Taylor 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.”
If the purchase is completed, Twitter stockholders “will receive $54.20 in cash for each share of Twitter common stock” they own, “a 38 percent premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9 percent stake in Twitter,” the announcement said.
The sale to Musk was unanimously approved by the Twitter board and “is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals, and the satisfaction of other customary closing conditions,” the announcement said. Musk previously secured $25.5 billion of debt and margin loan financing and committed to provide $21 billion in equity.
Musk hopes his “worst critics remain on Twitter”
“I hope that even my worst critics remain on Twitter, because that is what free speech means,” Musk wrote in a tweet Monday. Musk, who has said that “Twitter needs to be transformed as a private company” to protect free speech, last year asked a college student to take down a Twitter account that tracks the movements of his private jet.
Musk recently purchased 9.2 percent of Twitter’s stock and agreed to join Twitter’s board. He then backed out of the board seat deal, which would have prohibited him from buying more than 14.9 percent of the company’s stock, and offered to buy Twitter instead.
Twitter directors initially seemed ready to fight Musk’s takeover attempt and unanimously approved the poison pill that makes it difficult to buy more than 15 percent of the company’s stock in any “transaction not approved by the Board.” The poison pill, of course, did not prevent the board from striking a deal with Musk in direct negotiations.