Elon Musk is now officially the Lord of Twitter, as the social media company has accepted an offer to be acquired wholly by an entity owned by the Tesla chief in a deal valued at roughly $44 billion. The past few weeks have been a roller coaster ride of speculations and assumptions. Ever since Musk disclosed that he has acquired a 9.2% stake in the company, experts flagged that a hostile takeover was in the pipeline. Twitter, on the other hand, capped Musk’s maximum stake allowance in the company at 14.9% and offered him a seat on the board, which Musk rejected soon after.
A few days later, Musk announced that he has offered to buy Twitter in its entirety. Wall Street was skeptical about Musk’s ability to raise a sum of over $40 billion to pocket Twitter and the company adopted a ‘poison pill’ strategy to brush off Musk’s advances. However, the billionaire soon outlined a plan that involved raising loans from a consortium of banks led by Morgan Stanley and equity investment using his Tesla shares as the guarantee. Following the offer, the Twitter board held a meeting over the weekend and continued discussions with Musk until the early hours of Monday.
All of that board tussling and Wall Street speculation has finally come to a conclusion. As per the official press release, Elon Musk has acquired Twitter at a share price of $54.20 each, the same value that he floated in his initial “best and final” offer a few days ago. At that share valuation, the net acquisition value falls somewhere around $44 billion. As Musk had initially promised in earlier Tweets, the company is now a private property wholly owned by him. As for the existing stakeholders, they will receive a sum of $54.20 for each share that they own in the company, once the transaction has gone through and received regulatory approval. Shortly after the confirmation of the deal, Musk tweeted that “the glory days” have just begun.
Open-Source Algorithm And No More Bots
Musk again reiterated his stance that the social media platform was a ‘digital town square’ where issues that are of significant importance to humanity are discussed. He also added that free speech was the foundation of a functioning democracy, barely a few weeks after Musk criticized Twitter for not adhering to the principle of free speech. Regarding his plans for the platform moving forward, Musk notes that he will open-source the algorithm, which is again not surprising as the world’s richest man has commented on this in past Tweets. “I also want to make Twitter better than ever by enhancing the product with new features,” he added. It looks like the promised change to the blue badge verification system is also going to happen as well. Another change that appears to be on Musk’s immediate agenda for Twitter is tackling the menace of bots, even though he hasn’t fleshed out the idea behind doing this, yet.
“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,” Twitter CEO Parag Agrawal was quoted as saying. Coming to the financial aspects of the deal, Musk paid for his latest purchase by raising $25 billion in debt and margin loan financing, while the remaining $21 billion comes in the form of equity commitment, most likely against his stake in Tesla, as originally discussed in an SEC filing last week. Musk recently tweeted that if he manages to take Twitter private, he would reduce the compensation of board members to zero. However, neither Twitter, nor Musk, have said anything about those plans yet.
