One of the world’s wealthiest business moguls is putting his cash where his social media beliefs are. Twitter on Monday announced it entered into a definitive agreement for Elon Musk to purchase the social media platform for some $44 billion.
Once the transaction is completed, Twitter will become a privately held company. Twitter made the announcement following Musk’s meeting with the 11-member board to discuss his offer to buy the social networking service.
The sale agreement gives the company’s stockholders $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38 percent premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Musk disclosed his approximately nine percent stake in Twitter, according to Twitter’s announcement.
“The Twitter board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders,” said Bret Taylor, Twitter’s independent board chair.
Parag Agrawal, Twitter’s CEO, added that Twitter has a “purpose and relevance that impacts the entire world.”
Onward to Better Performance
Musk’s goal is to improve Twitter by enhancing the product with new features, he said in the announcement. He plans to make Twitter better by making its algorithms open source to increase trust, defeating the spambots, and authenticating all humans.
??♥️ Yesss!!! ♥️?? pic.twitter.com/0T9HzUHuh6
— Elon Musk (@elonmusk) April 25, 2022
“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,” said Musk.
Twitter has tremendous potential. Musk said he looks forward to working with the company and the community of users to unlock that potential.
Accounting the Deal’s Purchase
The Twitter board unanimously approved the agreement for Musk to take over the controversy-laden media service. The transaction should close before this year ends.
For that to occur, Twitter’s stockholders must approve. Also needed is the consent of applicable regulatory approvals and the satisfaction of other customary closing conditions.
Musk has secured $25.5 billion of fully committed debt and margin loan financing. He is also providing an approximately $21 billion equity commitment. There are no financing conditions for the closing of the transaction.
Twitter officials will disclose the first quarter 2022 earnings results before the stock market opens on Thursday. In light of Monday’s pending transaction, Twitter will not hold a corresponding conference call.
Twittersphere All a Flutter
The Musk/Twitter developments dominated the news and social media posts all day Monday, offered Charles King, principal analyst at Pund-IT. Most of those discussions focused on Musk’s plans or intentions, including exactly what he means by “free speech.”
“From a technological perspective, I doubt any significant changes will occur in the short term unless adding an ‘edit’ button to tweet posts, streamlining the ‘blue check’ process, or adding a paid user tier qualifies as technology,” quipped King.
A larger tech-related issue is what, if any, changes Musk is planning in regard to users’ data and how that might impact Twitter’s advertising strategy and ad sales, he observed.
“It is entirely likely that a more aggressive approach to leveraging that data could make Twitter more commercially successful and valuable. But such changes would also impact and likely deteriorate the experience Twitter users have come to enjoy and expect,” he told the E-Commerce Times.
Musk wants to go open source with algorithms that significantly define and automatically moderate the platform and reduce moderation. We are likely to see that the two parties begin to look at the code and aggressively complain about parts they think work against their political platforms, according to Rob Enderle, principal analyst of the Enderle Group.
Given that we think that anyone who disagrees with us is biased, even if the tool is not biased, these efforts will constantly create the impression they are, he added.
“I expect Twitter will bleed a lot of users and advertisers, and the resulting controversy will bleed over and damage Musk’s other companies over time, especially Tesla, which primarily sells to a liberal audience,” he told the E-Commerce Times.
“Added to this will be the founding belief that Musk is only doing this to stop moderation on his posts, which will undoubtedly be problematic for trusting Twitter to be unbiased in the future,” he said.
Lifting the Blinds at Twitter
Obviously, time will tell on how this is all executed, noted Casey Ellis, founder and CTO at Bugcrowd. Musk is a big fan of pulling back the curtains on how social media platforms and machine learning shape popular thought. He focuses on how and where these systems can be weaponized to cause harm, the implications of this on today’s society, and what improvements could be made to improve the integrity of information and news in the future.
“Bugcrowd’s work in election security has shown me time and time again the exploitability and outsized impact that platforms like Twitter are capable of, so an increase in transparency around the mechanics of how we all perceive what is true is fundamentally a good thing if Musk follows through on these aspects of what he has committed around the purchase,” he told he told the E-Commerce Times.
“His follow-through on this commitment with Tesla several years ago gives me some confidence that this will actually happen,” he said.