Tesla Chief Executive Elon Musk tendered an offer to buy Twitter Inc. today mere days after he turned down a seat on the social media giant’s board of directors.
According to the filing, Musk is making an all-cash offer of $54.20 per Twitter share that would acquire all the shares that he does not currently own, valuing the company at about $43 billion.
The Tesla CEO became Twitter’s largest shareholder with a 9.2% stake earlier this month and announced plans to join the company’s board. However, that changed on Sunday when Twitter CEO Parag Agrawal said that Musk dropped those plans.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk wrote in a letter addressing Bret Taylor, chairman of the board at Twitter, as part of the SEC filing. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Twitter responded in a statement early Thursday morning confirming that it had received the proposal.
“The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders,” the company said in the statement.
Update: Musk conceded before a TED conference in Vancouver today that he may not be able to buy Twitter, adding that the goal wasn’t to make money on the deal. Shortly after that, the New York Post reported that the private equity giant Thoma Bravo was working on a possible bid to buy Twitter.
Twitter’s shares were up 4% Thursday morning to $47.68 after closing at $45.85 on Wednesday and then fell once again to near $45.36 by early afternoon EDT. Update: Shares actually fell on the day by almost 1.7%, to $45.08, presumably after investors digested the latest news.
“Very notable that Twitter stock isn’t rising close to Musk’s bid,” Dan Primak, business editor at Axios, tweeted. “Traders either don’t believe he’s serious, that he can get the cash or that the board will accept.”
Indeed, analysts seem skeptical as well. Since the offer price is a 30% discount from Twitter’s all-time high, Cowen & Co. analyst John Blackledge wrote in a note to clients today, it’s likely Twitter’s board will reject the offer. Also, he noted, the company has several anti-takeover provisions. “We also do not view internet and/or media strategic players coming to the table at this point, as a deal with the large digital ad platforms (AMZN, FB, GOOG) would likely not pass regulatory scrutiny,” he added.
Bloomberg later reported that Twitter was considering implementing a “poison pill” that would enable it to repel an unwanted acquisition. The tactic gives existing shareholders the right to purchase more shares at a discounted price, effectively diluting the ownership interest of a hostile bidder.
All this news comes shortly after Agrawal warned investors of “distractions ahead.”
Musk’s mention of Twitter’s “societal imperative” to free speech caught the attention of people on the platform, particularly journalists, who had mixed reactions on how his takeover of the platform might work out. Like many social media platforms, Twitter has had its share of controversy when it comes to decisions about free speech, privacy and user control.
“Like everyone, I have no idea what Elon Musk’s intentions are with Twitter,” Glenn Greenwald, himself a polarizing force as an attorney and journalist, said in a tweet thread. “If Musk restored what was heralded as the potential of not only Twitter but the internet generally — liberating people from centralized state and corporate control and fostering free discourse — it’d be one of the most valuable developments in years.”
However, Musk is better known for his eccentric behavior and bombast than for preserving freedom of speech. Nilay Patel, editor-in-chief of The Verge, pointed out in a tweet thread that Twitter is a global platform and taking a North American-centric attitude to freedom of speech might not serve it well.
“Elon soon to discover that ‘free speech around the globe’ means very different things in different countries, none of whom like having their laws broken and who will happily retaliate against Tesla and SpaceX to spite the world’s richest man,” Patel said. “You can’t promote Nazism in Germany, that’s a full-on speech regulation that country cares about a lot. Is Elon planning to flout that restriction and put Tesla at risk in Europe’s largest auto market retaliating to do it?”
With reporting from Robert Hof