Let’s make a deal! In a move that shocked many, billionaire Elon Musk and Twitter have come to an agreement. The Tesla and SpaceX CEO will buy the social media platform for $54.20 per share, equating to about $44 billion. The sale price is a 38% premium over the company’s share price on April 1, 2022, the final day before Musk disclosed his 9.2% ownership stake in the company. Musk will finance the sale with $13 billion in bank loans, $12.5 billion in loans secured by his Tesla stock, and $21 billion in cash to buy the balance of Twitter equity, reports The New York Times.
Twitter’s board of directors unanimously approved the proposed sale, and the deal is expected to close this year. It is subject to customary closing conditions and regulatory approvals. It must also receive the approval of Twitter shareholders. Elon Musk intends to take the company private upon completion of the sale.
“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,” said Bret Taylor, independent board chair for Twitter, in an April 25 news release.
Parag Agrawal, Twitter’s CEO since November, also commented on the sale.
“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,” Agrawal said.
According to The New York Times, Agrawal and Taylor held a staff meeting with employees yesterday afternoon to answer questions about the deal and the future of their positions.
“It’s important to acknowledge that all of you have many different feelings about what is happening,” said Agrawal according to two unnamed sources. “Some of you are concerned, some of you are excited, and some of you are waiting to see how this goes. I know this affects all of you personally.”
Twitter will release its first quarter 2022 financials this Thursday but, in light of the pending sale, the company will not hold a conference call as they usually do to discuss the results.
Elon Musk also made a statement that Twitter included in their formal announcement.
“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.” said Musk. “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.”
Musk also tweeted the news.
Reaction from the public
As of 7:31 p.m. EDT, Musk’s Twitter announcement had 1.3 million likes, 211.5K retweets and 41.2K quote tweets. There was a wide range of reactions, but there were some common themes and clever memes. People are overwhelmingly excited about the idea of identity verification, an open source algorithm and getting rid of spam bots. People, however, expressed concern about racism, the possibility that Musk could allow former President Trump back onto the platform
This deal follows weeks of posturing between Musk and Twitter and much speculation about what Twitter could and should be. As previously reported, Musk has talked about lowering the price of the Twitter Blue subscription; subscribers should get an authentication checkmark; accounts should be suspended with no refund if used for spam or scams; Twitter Blue should be ad-free and Dogecoin, a cryptocurrency favored by Musk, should be accepted for subscription payments.
Some media outlets are reporting that the deal could mean that lies, misinformation, disinformation and political and ideological extremism could return to Twitter in the name of free speech. Some even went so far as to name currently blocked users who could be restored.
Wow. We didn’t see this one coming. After the offer was first presented, the Twitter board implemented a poison pill to prevent a hostile takeover to buy time to consider Musk’s offer. This seemed like a strong indication they were not interested in being purchased outright by Elon Musk. While they were considering Musk’s offer, the billionaire went on record saying he had a plan B in mind should Twitter reject his offer, possibly going directly to shareholders to secure their support. Regardless, a deal has been forged and no one really knows what to expect from Musk or Twitter. For the time being, Twitter and its employees will continue on their current projects, and we will watch as the changes unfold.
One thing we are particularly interested in watching for is how Twitter’s subscription model could potentially change. Twitter Blue, the company’s first subscription product, is less than a year old, and Musk has already made a number of suggestions for change. He has also said that this is not an economic decision for him, but an ideological one. In other words, subscription revenue may not be a top priority for him. He could utilize a different revenue model and scrap the company’s plans to grow subscription revenue to reduce the company’s reliance on advertising revenue.