Twitter Inc. has agreed to be acquired by billionaire Elon Musk, CEO of Austin-based automaker Tesla, in a deal worth about $44 billion, the social media platform said Monday.
Twitter said it has agreed to beacquired by an entity controlled byMusk for$54.20per share in cash. Twitter will become a privately held company once the deal is completed.
Twitter stockholders will receive$54.20per share of common stock that they own upon closing of the deal. The purchase price is a 38% premium to Twitter's closing stock price onApril 1, which was the last trading day before Musk disclosed his 9% stake in Twitter.
Twitter's shares closed Monday up 5.7% following news of the agreement.
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Musk, the world’s wealthiest person, has said he wants to buy Twitter because he thinks it’s not living up to its potential as a platform for free speech.He says it needs to be transformed as a private companyto build trust with users and do better at servingthe “societal imperative” of free speech.
"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 a statement. "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."
On Twitter, Musk said,"I hope that even my worst critics remain on Twitter, because that is what free speech means."
Twitter’s board at first enacted an anti-takeover measure known as a poison pill that could have made a takeover attempt prohibitively expensive. But when Musk outlined the financial commitments he’d lined up to back his offer of $46.5 billion — and no other bidders emerged — the board opened negotiations with him.
“Twitter has a purpose and relevance that impacts the entire world,” CEO Parag Agrawal said in a tweet. “Deeply proud of our teams and inspired by the work that has never been more important.”
Musk has voiced a number of proposed changes for the company, from relaxing its content restrictions — such as the rules that suspended former President Donald Trump’s account — to ridding the platform of fake and automated accounts, and shifting away from its advertising-based revenue model.
A more hands-off approach to content moderation has some critics saying the platform could become more of a haven for disinformation and hate speech.
Scott Kessler, global sector lead for technology media at Third Bridge, saidthat “it seems that major changes are ahead for Twitter ...but the specifics at this point are pretty lacking.
"Musk has tweeted about the importance of free speech and an ‘edit button,’” Kessler added. "He wants people with big Twitter followings to become more active on the platform. He favors monetization through subscriptions versus advertising.”
Musk has battled with the Securities and Exchange Commission on multiple occasions, as he has used Twitter to criticize the regulators.
The SEC has been investigating Musk’s August 2018 tweets in which he asserted that he’d secured funding to take Tesla private for $420 a share, though he had not. Musk is fighting an SEC subpoena in the case in federal court. More recently, he appeared to have violated SEC rules by failing to disclose when he reached a 5% stake in Twitter, waiting until he had more than 9%.
Noteworthy as they are, the SEC matters have no bearing on Musk’s fitness to buy a company, according to St. John's University business professor Anthony Sabino, making it unlikely that they would represent roadblocks to the takeover.
Musk is the world’s wealthiest person, according to Forbes, with a nearly $279 billion fortune. But much of his money is tied up in Tesla stock — he owns about 17% of the electric car company,according to FactSet, which is valued at more than $1 trillion — and SpaceX, his privately held space company. It’s unclear how much cash Musk has.
Musk began making his fortune in 1999 when he sold Zip2, an online mapping and business directory, to Compaq for $307 million. He used his share to create what would become PayPal, an internet service that bypassed banks and allowed consumers to pay businesses directly. It was sold to eBay for $1.5 billion in 2002.
That same year, Musk founded Space Exploration Technologies, or SpaceX, after finding that cost constraints were limiting NASA’s interplanetary travel. The company eventually developed cost-effective reusable rockets.
In 2004, Musk was courted to invest in Tesla, then a startup trying to build an electric car. Eventually he became CEO and led the company to astronomical success as the world’s most valuable automaker and largest seller of electric vehicles.
Last year, Musk announced that Tesla's headquarters were moving to Austin, on the site of the company's new $1.1 billion manufacturing facility. He has since moved the headquarters of the Boring Co., his tunneling and infrastructure operation, to Central Texas. A potential SpaceX expansion is possible in Austin, and Musk has already moved the headquarters of his private foundation, the Musk Foundation, to Austinas well.
Some technology analysts have said they wouldn't be surprised if Musk considers moving Twitter's headquarters to Austinonce the deal is completed.
This report includes material from USA Today, The Associated Press and American-Statesman reporter Kara Carlson.
