World’s Richest Man, Elon Musk Moves To Buy Twitter After Being Annoyed By The Management

April 15, 2022 9News Nigeria Business, Hot News, Investment, Tech 0

The world’s richest man, Elon Musk has offered to buy Twitter Inc. private in a deal valued at $43 billion after he was dissatisfied with the company’s handling of freedom of speech rights.

Elon Husk lambasted Twitter management and said he’s the person who can unlock the “extraordinary potential” of a communication platform used daily by more than 200 million people.

Musk announced the proposed deal in a filing with the U.S. Securities and Exchange Commission on Thursday, after turning down the chance to take a board seat at the company. Musk, who also controls Tesla Inc., first disclosed a stake of about 9% on April 4, making him the largest individual investor. Tesla shares fell about 3% on concern that the attempt to acquire Twitter will be a distraction for Musk.

The Billionaire entrepreneur said he’ll pay $54.20 per share in cash, 38% above the price on April 1, the last trading day before Musk went public with his stake. The social media company’s shares were little changed at $45.81 in New York on Thursday, a sign there’s scepticism that one of the platform’s most outspoken users will succeed in his takeover attempt.

Responding to the offer, Twitter said that its board would review the proposal and any response would be in the best interests of “all Twitter stockholders.” The board, which was set to meet to evaluate the proposal early Thursday, sees the takeover offer as unwelcome and will probably fight it, the Information reported, citing a person familiar with the matter.

Speaking in an interview at a TED conference in Vancouver on Thursday, the 50 years old billionaire said that he’s not sure he’ll succeed with the acquisition, and indicated that he has a Plan B if Twitter’s board rejects his offer. He declined to elaborate.

Twitter declined to comment on the board meeting or Musk’s comments at TED.

The bid is the most high-stakes clash yet between Musk and the social media platform. The executive is one of Twitter’s most-watched firebrands, often tweeting out memes and taunts to @elonmusk’s more than 80 million followers. He has been vociferous about changes he’d like to consider imposing on the social media platform, and the company offered him a seat on the board following the announcement of his $3.35 billion stakes.

After announcing his stake, Musk immediately began appealing to fellow users about prospective moves, from turning Twitter’s San Francisco headquarters into a homeless shelter and adding an edit button for tweets to granting automatic verification marks to premium users. One tweet suggested Twitter might be dying, given that several celebrities with high numbers of followers rarely tweet.

Unsatisfied with the influence that comes with being Twitter’s largest investor, he has now launched a full takeover, one of the few individuals who can afford it outright. He’s currently worth about $260 billion according to the Bloomberg Billionaires Index.

Although Musk is the world’s richest person, how he will find $43 billion in cash has yet to be revealed.

“This becomes a hostile takeover offer which is going to cost a serious amount of cash,” said Neil Campling, head of TMT research at Mirabaud Equity Research. “He will have to sell a decent piece of Tesla stock to fund it, or a massive loan against it.”

At the TED conference Thursday, Musk said that if he succeeds in his bid, he would seek to retain as many other shareholders as the law allows for a private company, rather than being the sole owner.

“I could technically afford it,” Musk said “But this is not a way to sort of make money. It’s just that I think this is — my strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. I don’t care about the economics at all.”

Much of Musk’s ire against Twitter has been directed against what he perceives as censorship by the platform. In a letter to Twitter’s board alongside details regarding his offer, Musk said he believes Twitter: “will neither thrive nor serve [its free speech] societal imperative in its current form. Twitter needs to be transformed into a private company”

Musk is offering a 54% premium over the Jan. 28 closing price, the date after which he began building his initial stake in Twitter. The takeover attempt is unlikely to be a drawn-out process.

“If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder,” said Musk.

Musk informed Twitter’s board over the previous weekend that he thought the company should be taken private, according to today’s statement.

Read this next: How Jack Dorsey Quit Twitter to Become Bitcoin’s Spiritual Leader

The $54.20 per share offer is “too low” for shareholders or the board to accept, said Vital Knowledge’s Adam Crisafulli in a report, adding that the company’s shares hit $70 less than a year ago.

Twitter shareholder Saudi Prince Alwaleed bin Talal said he rejects Musk’s offer as not coming “close to the intrinsic value” of Twitter “given its growth prospects.”

Although Musk said his offer was “best and final,” it opens the gates to rivals, either to team up with or out-bid his offer. Oracle CEO Larry Ellison, also on the board of Tesla, previously attempted to buy a stake in the social media platform TikTok.

Musk has hired Morgan Stanley as his adviser for the bid. The offer price also includes the number 420, widely recognized as a coded reference to marijuana. He also picked $420 as the share price for possibly taking Tesla private in 2018, a move that brought him scrutiny from the SEC.

“There will be the host of questions around financing, regulatory, balancing Musk’s time (Tesla, SpaceX) in the coming days,” said Dan Ives, an analyst at Wedbush. “But ultimately based on this filing it is a now or never bid for Twitter to accept.”

I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.

However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed into a private company.

As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.

Twitter has extraordinary potential. I will unlock it.

Elon Musk’s full letter to Twitter’s board

Source: Bloomberg

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