“Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it,” Elon Musk said in a statement.
Updated at 3:42 pm EST
Twitter (TWTR) – Get Twitter, Inc. Report agreed to a $44 billion takeover offer from Elon Musk Monday that will see the social media group become a private company, ending weeks of speculation ignited when the billionaire Tesla (TSLA) – Get Tesla Inc Report CEO began amassing a stake in the website earlier this month.
Musk will pay $54.20 per share the group, a price that matches his earlier ‘best and final’ offer that values the micro-blogging website at around $44 billion. Twitter agreed to the purchase after a “thoughtful and comprehensive process”, that the board said was the “best path forward for Twitter’s stockholders” and delivered “a substantial cash premium.”
Musk first made his stake in Twitter public on April 4, filing a 13-G declaration with the Securities and Exchange Commission that indicated he would only be a ‘passive’ investor in the group only weeks after he said he was giving ‘serious thought” to starting his own social media company after accusing Twitter of “failing to adhere to free speech principles fundamentally undermines democracy” given that the site “serves as the de facto public town square.”
Days later, Musk altered his SEC filing to a 13-D submission that indicated he owned a 9.1% stake in the group and planned to seek ‘significant changes’ in both its management and operations.
“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,” he added.
Twitter shares were marked 6.1% higher in late afternoon trading Monday to change hands at $51.91 each, after being briefly suspended from trading on the Nasdaq prior to the announcement of the deal. Tesla shares were marked 1.5% lower at $990.00 each.
Musk has financing in place for his ‘best and final’ offer for Twitter that is linked to his current 173 million in Tesla shares, around 88 million of which are pledged against various personal loans. Yet even with funding of around $46.5 million established, Musk is likely to offload billions in Tesla stock in order to reach his suggested contribution of between $20 and $30 billion.
A successful Twitter takeover would also heap another significant challenge on top of the billionaire’s growing leadership portfolio, which includes space exploration group SpaceX, The Boring Company construction company and neurotechnology specialists Neuralink Corp.
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Twitter CEO Parag Agrawal, who recently took over from the departing founder Jack Dorsey, said he was “deeply proud of our teams and inspired by the work that has never been more important,” adding that the deal shows Twitter “has a purpose and relevance that impacts the entire world.”
At last count, 73.5% of the 2.5 million people who voted in the poll had selected “yes” to Musk’s edit feature question.
Twitter earlier this year that non-GAAP earnings for the three months ending in December were pegged at 33 cents per share, down 13.1% from the same period last year and 2 cents shy of the Street consensus forecast. Group revenues rose 22% to $1.57 billion, matching Street forecasts, with $1.47 billion coming from its advertising division.
Looking into the coming year, Twitter said it sees revenue growth in the “low to mid 20% range” and held onto its 2021 guidance that sees $7.5 billion in revenues and 315 million daily active users by 2023.
Twitter will post its first quarter earnings on Thursday.
