Elon Musk set to buy Twitter in $44b deal, promises stuff
Pretty cool that all other problems a billionaire could reasonably tackle are solved, leaving this one
It's official. Twitter's board on Monday said it has accepted an offer from Elon Musk, the world's richest man, to purchase the micro-blogging website and take it private.
The deal was accepted at Musk's original asking price of $54.20 per share, which Twitter said values the biz at approximately $44 billion. Bret Taylor, Twitter's independent board chair, said the board believed it was the best path forward for stockholders, and that the deal "will deliver a substantial cash premium."
"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, who used Twitter over the weekend to mock Bill Gates for being out of shape. (Gates, for what it's worth, is apparently shorting Musk's Tesla stock.)
"I also want to make Twitter better than ever by enhancing the product with new features," Musk (net worth: $270B) continued, "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."
As previously reported, the Tesla and SpaceX supremo financed $21 billion of the deal on his own, and received the rest from the likes of Bank of America, Morgan Stanley, and Barclays. The deal is expected to close sometime in 2022, once it's cleared all the usual hurdles including shareholder and regulatory approval, and upon completion Twitter would become privately held.
Musk made his initial offer to buy Twitter in early April, which the board rejected and responded to with a poison pill that would have made it tricker for Musk to seize control in a hostile takeover. Because the board approved today's deal, the poison pill won't take effect.
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Musk previously said he wanted to unlock the potential of Twitter, which he said hasn't been realized. He reiterated much of the same today, saying he hoped to improve Twitter with new features, publish for inspection the algorithms used by Twitter to highlight and surface tweets, expand account verification, and rid the network of spam bots.
A Forrester poll conducted over the weekend (with a small 285-person sample size) found Twitter users are less than sure of a Musk takeover. Only a quarter of respondents said they thought that Musk would make Twitter a better place, just 10 percent thought Twitter content moderation practices are too strict, and just over a third said Twitter's algorithms should be open sourced. The majority did say they wanted spam bots eliminated, and to be able to edit tweets after posting – two changes Musk has pledged to enact.
The mood inside Twitter is one of uncertainty: employees say they've been left in the dark, and are worried that a stock buyout will lead to long-term financial losses for some Twitter employees, many of whom make 50 percent of their income on stock options.
Analyst opinions are also uncertain what sort of financial impact the sale will have on Twitter itself, which stands to lose a good chunk of its revenue to Musk's loans: it'll likely cost the company around $1 billion per year in debt servicing costs – see the Twitter thread below – and it recorded $5.08 billion revenue in 2021. ®
Twitter will have about $1 billion in interest payments due annually after this buyout – and its cash flows are projected to be about $1.43 billion this year and $1.85 billion in 2023. So debt payments will consume a huge chunk of Twitter's cash.— Tim O'Brien (@TimOBrien) April 25, 2022