Elon Musk Moves to Acquire Twitter for $54.20 a Share

Elon Musk, the richest individual in the world, has filed a statement with the Securities and Exchange Commission indicating his intent to acquire Twitter (NYSE:TWTR). Shares jumped higher in early trading on the news.

The Schedule 13D filing states:

“On April 13, 2022, the Reporting Person delivered a letter to the Issuer (the “Letter”) which contained a non-binding proposal (the “Proposal”) to acquire all of the outstanding Common Stock of the Issuer not owned by the Reporting Person for all cash consideration valuing the Common Stock at $54.20 per share (the “Proposed Transaction”). This represents a 54% premium over the closing price of the Common Stock on January 28, 2022, the trading day before the Reporting Person began investing in the Issuer, and a 38% premium over the closing price of the Common Stock on April 1, 2022, the trading day before the Reporting Person’s investment in the Issuer was publicly announced.

The Proposal is non-binding and, once structured and agreed upon, would be conditioned upon, among other things, the (i) receipt of any required governmental approvals; (ii) confirmatory legal, business, regulatory, accounting and tax due diligence; (iii) the negotiation and execution of definitive agreements providing for the Proposed Transaction; and (iv) completion of anticipated financing.”

Musk already owns 73,115,038 shares of Twitter, or a bit more than 9% of the company. Morgan Stanley is advising Musk on the potential acquisition.

The filing shared a communication with company leadership that took place in recent days:

“As I indicated this weekend, I believe that the company should be private to go through the changes that need to be made. After the past several days of thinking this over, I have decided I want to acquire the company and take it private. I am going to send you an offer letter tonight, it will be public in the morning.”

Musk told Twitter Chairman of the Board, Bret Taylor:

“I am not playing the back-and-forth game. I have moved straight to the end. It’s a high price and your shareholders will love it. 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. This is not a threat, it’s simply not a good investment without the changes that need to be made. And those changes won’t happen without taking the company private.”

The saga unfolded when Musk announced his investment in Twitter, a social media platform where he has more than 80 million followers. First, it appeared that Musk would work with the current leadership and join the board of directors. Musk soon changed his mind and has now shifted to a full-blown acquisition of the company that values the firm at $43 billion.

Musk has been critical of Twitter’s decision to deny free speech. Twitter has emerged as a vital platform for the media to distribute ideas and interact with the public. Yet this public forum has stumbled in the eyes of many, apparently due to left-leaning opinions at the social media platform.

In 2020, Twitter banned an article by the NYPost regarding the Hunter Biden laptop. The move by Twitter appeared to indicate its desire to influence the Presidential election. More recently, it banned right-wing satire site the Babylon Bee for an article regarding the “man of the year.” There are other occurrences of Twitter lacking balance it is management of tweets and users that do not align with the left.

Musk, a free speech absolutist, has not aligned himself with any single party but has frequently shared his opinions on diverse matters which lean towards libertarianism. His frequent public comments are widely followed by all sides. A purchase of Twitter by Musk would most certainly usher in significant changes at the firm.

In the filing, Musk noted that the offer to take Twitter private may be modified at any time but also indicated the offer was a final one. Twitter became a publicly traded firm in 2013 at a share price of $26. The company’s 52-week high is over $73 a share but more recently it has hovered in the $30s.

Just last week, Musk posted a tweet asking if Twitter is dying as many of its most follwed users rarely Tweet. Today’s announcement indicates he is of the opinion that Twitter is not dead yet but it is in need of a drastic change in a direction that may turn Twitter into an actual public forum. You may expect the Twitter Board to issue its response later today.

 



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