Billionaire Elon Musk has offered to buy Twitter for about $41 billion just days after turning down a seat on the social media company’s board.
Musk’s offer price of $54.20 per share, disclosed in a regulatory filing on Thursday, represents a 38% premium to Twitter’s closing price on April 1, the last trading day before the more as the CEO of Tesla owning a 9% stake in the company.
Shares of Twitter are up 12% in premarket trading.
“Since making my investment, it has been clear to me that the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be turned into a private company,” Mr. Musk said in a letter to Twitter chairman Bret Taylor.
“I invested in Twitter because I believe in its potential to be the platform for free speech around the world, and I believe that free speech is a societal imperative for a functioning democracy,” Musk said in the filing. “However, since making my investment, I have come to realize that the company will not thrive in its current form, nor will it serve this societal imperative. Twitter needs to be transformed as a private company.”
Mr Musk’s takeover bid is just the latest development in his relationship with Twitter. The billionaire revealed in regulatory filings in recent weeks that he has been buying shares on an almost daily basis since Jan. 31. Only Vanguard Group’s mutual funds and ETFs control more Twitter stocks.
“My offer is my best and final offer and if not accepted I would have to reconsider my position as a shareholder,” Musk said.
Earlier this week, Mr. Musk said he had abandoned his plan to join Twitter’s board of directors just as his term was near. Taking over the seat on the board would have prevented him from taking over the company.
Mr. Musk and Tesla agreed in 2018 to pay $40 million in fines and have Musk have his tweets approved by a corporate attorney after he tweeted that he had the money to sell Tesla for $420 a share to take private. That didn’t happen, but the tweet sent Tesla’s stock price skyrocketing. Musk’s latest trouble with the SEC may be his delay in notifying regulators of his growing involvement in Twitter.
Mr Musk has described himself as a “free speech absolutist” and said he does not believe Twitter adheres to the principles of free speech – a view shared by supporters of Donald Trump and a number of other right-wing political figures. Their accounts have been suspended for violating Twitter’s content rules.
Here is a summary of the analyst comments:
BEN LAIDLER, GLOBAL MARKETS STRATEGIST, eToro:
“Musk’s offer of $54.20 per share is a whopping 38% higher than when his original stake was disclosed, but is still 30% below last year’s share price highs. This opens a battle for control between new CEO Parag Agrawal, who is trying to turn the company around, and Musk’s view that Twitter in its current form ‘will neither thrive nor serve (his) societal imperative’.”
MICHAEL HEWSON, CHIEF MARKET ANALYST AT CMC MARKETS:
“The big question for the Twitter board now is whether to accept a very generous offer for a company that has been a serial underperformer and tends to treat its users with indifference.
“Twitter has also come under increasing criticism towards real users for its arbitrary censorship of accounts that do not follow a specific political narrative, as well as the arbitrary way it screens users and deals with fake accounts.
“From customer service to the monetization of its user base, Twitter has been a serial underperformer for some time. Maybe shaking up the status quo wouldn’t be a bad thing!”
“Whatever your feelings about Musk, he would certainly shake things up with the only question being would he make things worse or better.”
(With inputs from AP)